Prudent Man Rule

A fundamental legal principle restricting the discretion of a trustee or executor to manage assets entrusted to him or her as a person of prudence would do under similar circumstances—i.e. with discretion, intelligence, honesty and care. The prudent man rule does not require that the trustee or executor always make correct decisions; it merely requires him or her to make decisions that will be generally accepted as sound for someone of average intelligence. The majority of states have replaced the Prudent Man Rule with the Prudent Investor Act.