Legal Definitions - Uniform Prudent Investor Act

The Uniform Prudent Investor Act (UPIA) is a set of standard rules created by the Uniform Law Commission (ULC) in 1994. These rules are recommended for enactment in all states and provide guidelines for trustees when investing trust property. The UPIA takes into account various factors such as risk and return, needs of beneficiaries, inflation or deflation, general economic conditions, potential tax consequences, liquidity, income, and preservation of capital.

For example, if a trustee is managing a trust fund for a minor child, they must consider the child's future needs and the potential impact of inflation on the fund's value. The trustee must also balance the need for income with the preservation of capital to ensure that the fund lasts for the child's lifetime.

As of October 2021, 43 states and the District of Columbia have enacted the UPIA, including California, Texas, and New York.