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Delaware’s 2018 Trust Act Allows Trustees to Better Respond to Beneficiaries’ Investment Values

When investing trust funds, trustees of a Delaware trust must abide by a statutory “prudent person” standard (unless expressly released from doing so in the trust instrument) that requires the trustee to act with “the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use to attain the purpose of the account.”  When investing as a prudent person, a trustee may take into account certain circumstances, including the tax consequences of a transaction, the overall health of the economy, and the investment horizon of the beneficiaries of the trust.  The 2018 Trust Act added to the list of circumstances a trustee may consider “the beneficiaries’ personal values, including the beneficiaries’ desire to engage in sustainable investing strategies that align with the beneficiaries’ social, environmental, governance or other values or beliefs of the beneficiaries.”

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