Uniform Prudent Investor Act

The Uniform Prudent Investor Act (UPIA) was drafted by the Uniform Law Commission (ULC) in 1994 and approved by the American Bar Association (ABA) in 1995. The UPIA  provides a model framework for states to regulate the investment responsibilities of trustees. The Act modernizes fiduciary investment law by incorporating the principles of modern portfolio theory, emphasizing total return, diversification, and risk management over individual asset evaluation.

The UPIA establishes general standards for trustee conduct, requiring investment decisions to be evaluated in the context of the trust portfolio as a whole and as part of an overall investment strategy suited to the trust’s objectives and beneficiaries’ needs. The Act directs trustees to consider factors such as:

• Risk and return objectives
• The needs and circumstances of beneficiaries
• Effects of inflation or deflation
• General economic conditions
• Potential tax consequences
• Liquidity requirements, income needs, and preservation of capital

Since its approval, the UPIA has been enacted (wholly or substantially) in nearly all U.S. jurisdictions.

[Last reviewed in October of 2025 by the Wex Definitions Team] 

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