What must a trustee do regarding trust-funded contracts?

The correct answer is that trustees must follow the "Prudent Investor Standard." This standard is a legal guideline that requires trustees to manage trust assets as a prudent investor would, taking into consideration the interests of the beneficiaries and the need to balance risk and return. It emphasizes the importance of diversification of investments, evaluating potential investment yields, and making informed decisions based on careful analysis and attention to the market conditions.

Following this standard helps to ensure that the trustee acts in the best interests of the beneficiaries, making choices that protect the trust assets while aiming for reasonable growth. It also imposes a level of accountability and responsibility on the trustee, as they must document their investment strategy and rationale, ensuring that they are acting in good faith and with due diligence.

Other options do not align with the responsibilities set forth in trust management. For instance, investing aggressively may expose the trust assets to undue risk, which is contrary to the prudent investor philosophy. Keeping all funds in a single account can limit diversification, potentially jeopardizing the trust's overall health. Notifying purchasers weekly about fund status is not a required duty of a trustee and is not aligned with standard practices for trust administration.