| Summary: | 碩士 === 中原大學 === 財經法律研究所 === 96 === Preserving trust property and making it productive historically
have been a fundamental duty of a trustee. A trustee is under a duty to
invest the funds in the trust, in order to achieve a further profit to the
fund. Therefore a trustee’s investment behaviors are of great
importance to trust property. There are significant market factors that
influence a trustee’s investment behavior and the investment
decision-making process. New improved investment vehicles are
introduced to the public almost everyday and all investments always
entail some degree of risk. However, different investment classes have
varying levels of risk and potential returns. In order to prevent improper
risk of investment and reduce the loss, it is necessary to provide specific
rules and guides for a trustee to make more prudent investing and
financial decisions.
First, this paper introduces and examines the relevant rules and
development of the trust laws of Taiwan regarding trustees’ investment
duty. Second, this paper provides an overview of the historical evolution
of American fiduciary investment standards and introduces the
American leading cases of trustee investment. By the early nineteenth
century, the traditional English standard centered on the notion that
only government securities offered enough safety to merit investment
by trustees. As a developing nation, America could not successfully
import this standard. Consequently, American courts started to
consider whether American trustees could participate in a more
expansive range of trust investments. American courts formulated
the ”prudent man rule” for trust investment. Provided that a trustee
used good judgment and care, he could employ any category of
investment, including more speculative holding like common stocks. By
the middle of the nineteenth century, the courts refined the prudent
man rule, and the broad principles narrowed into specific rules called
“legal list”. Legal List codified permissible trust investment and
generally limited trustees to choices among certain fixed income debt
instruments or bonds. Over times, changes in business and economic
conditions made the restrictive nature of these lists increasingly
impractical. The desire among academics and professionals alike has
been to bring both modern economic theory and common sense to
contemporary trust management. As a result, Restatement (Third) of
Trust-Prudent Investor Rule, adopted by the American Law Institution
in 1992, replies on modern portfolio theory to anchor the new “prudent
investor rule”. Under prudent investor rule, trustees may now utilize a
wider array of modern investments and can better respond to the
ever-changing market conditions that they face. Besides, there are
critical distinctions between professional and non-professionals
trustees such as differences in settlors’ expections and objections,
negotiation settings, monitoring costs, and the trustees’ responses to
liability. American courts gradually have developed two sets of fiduciary
standards for between professional and non-professionals trustees. In
the end, this paper proposes an adjustment of Taiwan legislation to
adopt the primary elements of “legal list” and “the prudent investor
rule” as described in Restatement (Third) so that trustees will follow the
specific standard to fulfill their obligations of investment.
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