7 Tips about the Trustee’s Duty to Invest Trust Assets in California

When administering a trust, one responsibility that many are overwhelmed by is the investment of trust assets. Individuals serving as trustee often are concerned with their potential liability if the investment does not perform well. California probate law imposes the Uniform Prudent Investor Act on trustees. The trust instrument itself may also provide guidelines. Fortunately, in most cases, trustees are permitted to hire an experienced Anaheim trust lawyer who can help with the management of assets.

To assist trustees responsible for investing assets, the following are helpful tips about the requirements for this duty:

  1. The trustee is required to minimize risk. This is done by diversifying investments and evaluating the performance of the entire investment portfolio.
  2. The trustee is obligated to balance risks and returns when making investments.
  3. The trustee may invest in nearly any type of asset.
  4. The trustee must utilize an overall investment strategy for the assets as a whole. A financial advisor can assist in the development of this strategy.
  5. The trustee may hire investment advisors and managers.
  6. The trustee must stay on top of the performance of the assets and review the performance regularly. 
  7. The trustee can invest in risky investments only where the level or risk is “appropriate under all of the circumstances.”

When the trustee is permitted to hire help to assist her in carrying out the duties of a trustee, it is advisable to assemble a team of knowledgeable advisors. This may include a CPA, a financial planner, and others.

To learn more about the duty to invest trust assets, view our free guide, Understanding the Revocable Living Trust – In Language that Anyone Can Understand in 8 Minutes. Our office of experienced Anaheim trust attorneys can provide further guidance. Call our office today at (714) 459-5481 for a consultation.

James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm