As a Living Trust & Estate Planning Attorney in Escondido, I often encounter questions about the oversight of trustees and ensuring the long-term health of a trust. The question of requiring periodic meetings between trustees and financial advisors is a valid and increasingly common one, reflecting a desire for proactive trust management and minimizing potential pitfalls. While a trust document cannot *directly* mandate such meetings without specific language included at its inception, there are several ways to strongly encourage – and even indirectly require – this beneficial practice. A well-drafted trust should prioritize the beneficiary’s best interests, and prudent financial management is a cornerstone of fulfilling that duty.
What are the trustee’s duties regarding investment?
Trustees have a fiduciary duty, meaning they are legally obligated to act in the best interests of the beneficiaries. This includes a duty of care, loyalty, and impartiality. Specifically regarding investment, this translates to making prudent investment decisions, diversifying assets to mitigate risk, and regularly reviewing performance. According to a Cerulli Associates report, approximately 65% of high-net-worth individuals express concern about their trustees’ investment acumen. A financial advisor can provide expert guidance, ensuring the trustee is meeting these standards. Incorporating a clause allowing for reasonable expenses, including financial advisor fees, demonstrates foresight and allows the trustee to access professional expertise. Failure to do so could lead to potential breaches of fiduciary duty and legal repercussions.
Can a trust document specify professional advice requirements?
Absolutely. A trust document can – and often should – include provisions that empower or even *require* the trustee to seek professional advice when necessary. This can take several forms. You could specify that the trustee “shall consult with a qualified financial advisor at least annually” or “may engage a financial advisor at the trust’s expense.” More sophisticated provisions could outline specific criteria for selecting an advisor, detailing qualifications and experience. A clause allowing the trustee to delegate investment authority to a qualified professional, subject to specific guidelines and oversight, can be exceptionally effective.
I recall a case involving the Peterson family trust. Old Man Peterson, a successful orchard owner, created a trust but didn’t specify any requirement for professional financial guidance. His daughter, appointed as trustee, had a background in education, not finance. She continued to invest conservatively in low-yield savings accounts, fearing any market volatility. Over time, inflation eroded the trust’s purchasing power significantly. The beneficiaries, his grandchildren, started to notice the decline and became understandably concerned. By the time she sought professional help, a considerable portion of the trust’s value had been lost, a direct result of inaction and a lack of expertise.
What happens if a trustee ignores sound financial advice?
If a trustee ignores sound financial advice, especially if it’s demonstrably in the best interest of the beneficiaries, they could be held liable for any resulting losses. This could lead to legal action, including a lawsuit for breach of fiduciary duty. The beneficiaries, or even a co-trustee, could petition the court to remove the trustee and appoint a successor. The trustee could be personally responsible for compensating the trust for any financial damages resulting from their negligence or imprudence. It’s estimated that approximately 20% of trust disputes involve allegations of mismanagement or breach of fiduciary duty, often stemming from poor investment decisions. Documenting all financial advice received and the rationale for any deviations from it is crucial for the trustee’s protection.
How did a proactive approach save another family’s trust?
The Miller family, after witnessing the Peterson’s struggles, took a completely different approach. Their trust document explicitly stated that the trustee – their son, a successful attorney but not a financial expert – *must* meet with a certified financial planner annually. The financial planner identified a more diversified investment strategy, incorporating growth stocks and real estate. Initially, the son was hesitant, fearing market risks. However, the financial planner patiently explained the long-term benefits and addressed his concerns. Over the next five years, the trust’s value increased substantially, providing a secure future for the Miller grandchildren. It was a testament to the power of proactive planning and seeking expert guidance. The family’s foresight not only protected their assets but also fostered a sense of peace and security for future generations.
In conclusion, while you cannot *force* a trustee to meet with a financial advisor without specific language in the trust document, you can strongly encourage it through carefully crafted provisions. Prioritizing professional guidance, outlining clear expectations, and allowing for reasonable expenses are all effective strategies. Proactive planning and diligent oversight are essential for ensuring the long-term health and success of any trust, safeguarding the financial future of your beneficiaries.
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About Steve Bliss at Escondido Probate Law:
Escondido 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 Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
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Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “What estate planning steps should I take if I own a small business?” Or “What does it mean for an estate to be “intestate”?” or “How do I transfer assets into my living trust? and even: “What is a bankruptcy discharge and what does it mean?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.