According to the Prudent Man rule, what is expected from a Trustee?

The Prudent Man rule is a legal guideline that requires trustees to act with a level of competence, caution, and diligence that a prudent person would exercise in managing their own affairs. This principle emphasizes the necessity for trustees to approach investment decisions thoughtfully and responsibly, ensuring they assess risks and make decisions that align with the best interests of the beneficiaries.

In this context, exercising skill, care, prudence, and diligence means that trustees must conduct thorough research, understand the investment environment, and ensure that all actions taken are in consideration of the long-term welfare of those whose assets they are managing. This approach helps protect the trust from potential losses due to unwise investment choices and aligns with the fiduciary responsibility held by trustees.

While options suggesting aggression or high risk imply a somewhat reckless approach, these do not meet the prudent standard outlined in the rule. Similarly, delegating all duties to an external manager may not fulfill the trustee's obligation to actively manage and oversee the trust assets, which is also contrary to the essence of prudence and diligence expected from trustees.