What is Florida’s “Prudent Investor Rule” regarding trust administration?

Florida has requirements on how a fiduciary is to manage and invest the assets of the Trust that the trustee administers.

Florida has adopted what is known as the “prudent investor rule,” which aims for a more balanced approach to the investment of assets in a Trust. Florida Statute §518.11 sets the terms as follows:

“The fiduciary has a duty to invest and manage investment assets as a prudent investor would considering the purposes, terms, distribution requirements, and other circumstances of the Trust. This standard requires the exercise of reasonable care and caution and is to be applied to investments not in isolation, but in the context of the investment portfolio as a whole and as a part of an overall investment strategy that should incorporate risk and return objectives reasonably suitable to the Trust, guardianship, or probate estate.”

The statute goes on to clarify that no specific investment can be designated as prudent or imprudent, and that the investments in the portfolio must be kept diverse by the fiduciary.