The trust document itself may provide some guidance with regard to how the trust assets should be invested. Most trust agreements do not leave detailed instructions for the Trustee, instead preferring to appoint a trusted and qualified person as Trustee who can make prudent investment decisions. A Trustee may be left to make decisions without additional guidance. When that is the case, the “Prudent Investor Rule” must always be kept in mind. That Prudent Investor Rule says that a Trustee should:
- At a bare minimum keep up with inflation
- Always keep the best interests of the beneficiaries in mind.
- Never put all the trust eggs in one basket – diversify the investments
- Invest cautiously and look at the big picture
- Keep the trust expenses to a minimum
Although a trust agreement may not provide details with regard to investing assets, the agreement will at least tell the Trustee what the goal of the trust is. For instance, the trust goal might be to provide for college tuition for the beneficiaries or to provide income to a spouse during his/her retirement years. The stated goal of the trust can tell the Trustee things such as when the trust income will be needed and approximately how much the trust will need to make to achieve the trust objectives. With the trust goals in mind, a Trustee is often left to make the day to day decisions himself/herself.
If you have additional questions or concerns about how trust assets are invested, contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia, calling 800-295-1917 to schedule your appointment.