KRS 286.3-277: Standards for bank or trust company acting as fiduciary.

(1) Notwithstanding the provisions of any other law, a bank empowered to act as a

fiduciary or trust company, when investing, reinvesting, purchasing, acquiring,

exchanging, selling, and managing property held in a fiduciary capacity, shall act as

a prudent investor would, in light of the purposes, terms, distribution requirements,

and other circumstances of the fiduciary account.

(2) The standard described in subsection (1) of this section requires the exercise of

reasonable care, skill, and caution, and is to be applied to investments not in

isolation but in the context of the account portfolio and as part of an overall

investment strategy, which should incorporate risk and return objectives reasonably

suitable to the account.

(3) In making and implementing investment decisions, the bank or trust company has a

duty to diversify the investments of the account unless, under the circumstances, it

is prudent not to do so.

(4) In addition, the bank or trust company shall:

(a) Conform to fundamental fiduciary duties of loyalty and impartiality;

(b) Act with prudence in deciding whether and how to delegate authority and in

the selection and supervision of agents; and

(c) Incur only costs that are reasonable in amount and appropriate to the

investment responsibilities of the account.

(5) The duties of the bank or trust company under this section are subject to the rule

that in investing the funds of the account, the bank or trust company:

(a) Has a duty to the beneficiaries of the account to conform to any applicable

statutory provisions governing investment by fiduciaries; and

(b) Has the power expressly or impliedly granted by the terms of the account or

applicable instrument and has a duty to the beneficiaries of the account to

conform to the terms of the account direc ting or restricting investments by the

bank or trust company.