Role of the Prudent Investor Rule in Trust Administration
Those who are entrusted with administering a trust are bound by California law to follow what is known as the Prudent Investor Rule, which means that trust assets must be invested and managed as a prudent investor would, while considering the purpose, terms, distribution requirements and other circumstances of the trust.
According to California's Prudent Investor Rule, trustees have a duty to:
· Select risk and return objectives reasonably suited to the trust
· Diversify investments
· Evaluate investments in the context of the portfolio as a whole
· Avoid unreasonable or inappropriate costs
· Consider tax consequences when making investment decisions
If the trustee lacks the knowledge or experience to carry out his or her duties, then it may be more prudent to seek the assistance of a financial advisor.
A trust administration attorney can help trustees who are unsure of all the duties and obligations of the position to fulfill their obligations under the law.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0041.