Important Guidelines for Trustees Making Investment Decisions

As the person in charge of administering your loved one’s trust, you have many responsibilities. One important duty of any trustee is to manage the investments of the trust in a prudent manner. However, the definition of “prudent” can vary from one trustee to another. Therefore, it’s important for trustees to understand the guidelines in which they are obligated to work when investing and managing the assets of a trust.

4 Factors Trustees Should Consider When Investing Trust Assets

After accepting the role of trustee, the first thing you should do is carefully review the terms of the trust. Generally, your options for investing trust assets are governed by the terms of the trust instrument. Unless the trust provides otherwise, the Uniform Prudent Investor Act governs trustee investment decisions. The Act requires the trustee to invest trust assets prudently, while considering the following factors:

  1. The overall size of the trust
  2. The general economic conditions
  3. The need for the trust to have liquidity
  4. The financial condition of the beneficiaries

Outside of these guidelines, the trustee is not specifically prohibited from utilizing certain types of investments when carrying out the responsibilities of managing the trust assets. However, if the trustee does not have experience working with investments, it may be advisable to seek guidance from a knowledgeable financial advisor in order to make the best possible investment decisions for the trust. Doing so can help minimize the chance of poor investment decisions and protect the trustee from later challenges by the beneficiaries.

To learn more about your rights and responsibilities as a trustee during a trust administration, we encourage you to contact us for more information. We can be reached at our toll free number, (714) 459-5481.