RCW 11.100.020
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Washington's adoption of the Uniform Prudent Investor Act. Establishes the standard of care a fiduciary (including a trustee holding HOA reserve funds) must apply when investing and managing trust assets. Requires a portfolio-context evaluation, mandatory consideration of economic conditions, tax consequences, and beneficiary needs, a duty of verification, and a duty to use any special skills the trustee claims to possess.
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Statutory Text
Verified Apr 19, 2026 · LEG_WA_GOV
(1) A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution. (2) A trustee's investment and management decisions respecting individual assets must be evaluated not in isolation but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust. (3) Among the circumstances that a trustee shall consider in investing and managing trust assets are such of the following as are relevant to the trust or its beneficiaries: (a) General economic conditions; (b) The possible effect of inflation or deflation; (c) The expected tax consequences of investment decisions or strategies; (d) The role that each investment or course of action plays within the overall portfolio, which may include financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property; (e) The expected total return from income and the appreciation of capital; (f) Other resources of the beneficiaries; (g) Needs for liquidity, regularity of income, and preservation or appreciation of capital; and (h) An asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries. (4) A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets. (5) A trustee may invest in any kind of property or type of investment consistent with the standards of this section. (6) A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee's representation that the trustee has special skills or expertise, has a duty to use those special skills or expertise. [ 2015 c 115 s 18 ; 1995 c 307 s 2 ; 1985 c 30 s 65 . Prior: 1984 c 149 s 97 ; 1955 c 33 s 30.24.020 ; prior: 1947 c 100 s 2 ; Rem. Supp. 1947 s 3255-10b. Formerly RCW 30.24.020 .] Notes: Application — 1995 c 307: See note following RCW 11.100.010 . Short title — Application — Purpose — Severability — 1985 c 30: See RCW 11.02.900 through 11.02.903 . Severability — Effective dates — 1984 c 149: See notes following RCW 11.02.005 . Endowment care funds to be invested in accordance with RCW 11.100.020 : RCW 68.44.030 .
Financial
| Ref | Requirement |
|---|---|
| (1) | A trustee holding HOA reserve funds must invest them like a sensible, careful investor would — not aggressively or speculatively, and always considering the HOA's reserve obligations and the time horizons until major component replacements come due. |
| (2) | A single risky investment doesn't violate the prudent investor rule if it's balanced by safer investments in the same portfolio. Courts look at the whole strategy, not at one investment in isolation. |
| (3) | The trustee must do real homework — review the economic outlook, anticipate inflation, run the tax math, consider the HOA's cash flow needs, and weigh how each investment fits the bigger picture. Token review is not enough. |
| (4) | A trustee cannot rely on assumptions or representations without checking. Due diligence — confirming financial data, reading prospectuses, verifying counterparties — is part of the fiduciary duty. |
| (6) | A bank or professional trustee that was chosen because of its investment expertise cannot then fall back on a generic standard. The trustee is held to the higher bar it claimed when accepting the role. |
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Legal references last verified July 4, 2026.
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