According to the Uniform Prudent Investor Law, if a bank trust department uses an outside investment service, what is required?

The correct response is that a bank trust department can delegate authority to the outside service provider when utilizing an outside investment service, as per the Uniform Prudent Investor Law (UPIL). This law emphasizes the importance of prudent investment management while also recognizing that certain responsibilities can be entrusted to qualified professionals or services.

When a trust department chooses to utilize an outside investment service, this does not absolve them of their overall responsibility to act prudently. However, it does allow them to rely on the expertise of the outside service for specific investment decisions, as long as they ensure that the provider is qualified and that their services align with the standards of prudent investing.

This delegation can be beneficial as it enables trust departments to harness specialized expertise and resources, which may lead to more optimized investment performance. However, the trust department remains accountable for ensuring that the overall investment strategy is in the best interest of the trust beneficiaries and that the delegated authority is being utilized appropriately.

In contrast, the alternatives focus on the responsibilities of the bank trust department but do not accurately reflect the provisions of the UPIL regarding delegation of authority, thereby informing why they are less fitting in this context.