Absolutely, a trustee not only *can* hire professionals to manage trust assets, but often has a fiduciary duty to do so if they lack the expertise to do so effectively. Managing trust assets responsibly requires a level of knowledge in areas like investment, real estate, accounting, and tax law that most individuals simply don’t possess. A trustee’s primary responsibility is to act in the best interest of the beneficiaries, and that sometimes means recognizing their own limitations and seeking outside help. This isn’t an admission of weakness, but a demonstration of responsible stewardship. The cost of these professionals is, of course, a legitimate expense of the trust, provided it’s reasonable and serves the beneficiaries’ interests.
What investment options are suitable for a trust?
Selecting appropriate investments for a trust is far more nuanced than simply picking stocks or bonds. The trustee must consider the trust’s objectives – is it meant to provide income, growth, or preservation of capital? – as well as the beneficiaries’ needs and risk tolerance, and the time horizon for distribution. Diversification is key, and a well-managed trust portfolio might include stocks, bonds, mutual funds, real estate, and other alternative investments. A qualified financial advisor can help the trustee create an investment policy statement (IPS) that outlines these guidelines. According to a recent study by Cerulli Associates, approximately 75% of high-net-worth individuals rely on financial advisors to manage their investments, demonstrating the prevalence of professional guidance.
What happens if a trustee makes a bad investment?
A trustee has a legal obligation to manage trust assets with prudence. This means making informed decisions, avoiding excessive risk, and diversifying investments. If a trustee makes a bad investment that results in losses, they can be held personally liable. However, not every loss automatically means the trustee breached their duty. The law recognizes that investments carry inherent risks, and even a prudent trustee can experience setbacks. But if the loss was caused by negligence, recklessness, or a failure to follow the trust terms, the trustee could face lawsuits from the beneficiaries. I recall a case involving a friend’s mother, Eleanor, who established a trust for her grandchildren. The trustee, an uncle with limited financial experience, invested a significant portion of the trust in a speculative tech stock based on a “hot tip.” The stock plummeted, costing the trust a substantial amount of money. The beneficiaries successfully sued the trustee for breach of fiduciary duty, and he was forced to reimburse the lost funds from his own assets. This highlights the critical importance of due diligence and professional advice.
What are the costs involved in hiring a professional trust manager?
The cost of hiring a professional trust manager varies widely depending on the size of the trust, the complexity of the assets, and the scope of services required. Some managers charge a percentage of the assets under management (AUM), typically ranging from 0.5% to 1.5% annually. Others charge an hourly rate, which can range from $200 to $500 or more. Fixed fees are also common for specific services like tax preparation or real estate management. It’s crucial to get a clear and transparent fee agreement upfront. It’s important to remember that while these costs can seem significant, they may be offset by better investment returns and reduced liability. I remember assisting a client, Mr. Harrison, whose family trust held several rental properties. Initially, he tried to manage the properties himself, but quickly became overwhelmed with tenant issues, maintenance requests, and legal compliance. He eventually hired a professional property management company, which streamlined the process, increased rental income, and saved him countless hours of stress. While the management fees were around 8% of the rental income, the benefits far outweighed the cost.
How can a trustee document their decisions and protect themselves from liability?
Meticulous record-keeping is absolutely essential for any trustee. This includes documenting all investment decisions, communications with beneficiaries, and expenses paid from the trust. Regular account statements, detailed investment reports, and copies of all relevant documents should be maintained. It’s also wise to consult with legal counsel and financial advisors before making significant decisions. A well-documented decision-making process demonstrates that the trustee acted prudently and in good faith. Furthermore, obtaining professional opinions can provide a layer of protection against potential claims. A trustee should maintain a clear trail of all actions taken, and be prepared to explain those actions to the beneficiaries or a court if necessary. This proactive approach can significantly reduce the risk of liability and ensure that the trust is managed effectively for the benefit of all involved.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
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| estate planning | revocable living trust | wills |
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Map To Steve Bliss Law in Temecula:
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Feel free to ask Attorney Steve Bliss about: “How do retirement accounts fit into an estate plan?” Or “Who is responsible for handling probate?” or “What professionals should I consult when creating a trust? and even: “Does my spouse have to file bankruptcy with me?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.