Which standards must trustees follow when investing trust money?

• A. They must follow the Trustee Act investment standard only.
• B. They must follow Prudent investment standards and cannot violate the Trustee Act investment standard.
• C. They may invest at their discretion with no standards.
• D. They must follow the financial officer's guidelines.

Answer: (B)

Trustees must invest trust money in a prudent and responsible way. In Ontario, the Trustee Act provides the legal framework for how investments should be made, and the prudent investment standard—often described as the modern, careful approach—guides how those investments are chosen. This means trustees must diversify, balance risk and expected return, and consider the trust’s purpose and time horizon, acting with the care, diligence, and skill of a prudent investor. They cannot ignore these obligations or invest solely on personal whim. The best answer reflects that trustees must follow prudent investment standards and cannot violate the Trustee Act investment standard, ensuring compliance with both the modern prudent approach and the statutory rule. Internal financial officer guidelines may inform decisions but do not replace the legal standards, and investing without any standards would violate fiduciary duties.