As a beneficiary or grantor of a trust, it’s natural to be concerned about the preservation of assets, and asking if you can direct a trustee towards low-volatility investments is a valid question. While you can certainly *express* your preferences, the ability to *require* a trustee to invest in specific types of portfolios, like low-volatility ones, isn’t always straightforward, and is heavily governed by the trust document itself and fiduciary duty. Trustees have a legal obligation to act in the best interests of the beneficiaries, which includes making prudent investment decisions; however, those decisions aren’t always aligned with simply avoiding risk. It’s a balancing act between growth, income, and preservation of capital, and it’s a frequent discussion point for clients of estate planning attorneys like Steve Bliss in Wildomar.
What are the trustee’s investment duties?
A trustee’s primary duty is to adhere to the “prudent investor rule,” which means making investment decisions with the care, skill, prudence, and diligence that a prudent person acting in a like capacity would use. This isn’t simply about avoiding losses; it’s about maximizing total return *given the risk tolerance* outlined in the trust document. According to a study by Cerulli Associates, approximately 65% of investors prioritize capital preservation over aggressive growth, highlighting the demand for more conservative approaches. The Uniform Prudent Investor Act (UPIA), adopted in most states including California, provides the legal framework for these duties. A trustee must diversify investments to minimize risk and consider the trust’s purposes, beneficiaries’ needs, and the overall investment horizon. This means a trustee can’t simply choose the “safest” investments if those investments won’t generate enough income or growth to meet the trust’s objectives.
Can I dictate investment strategy in the trust document?
Yes, absolutely. The trust document is the governing instrument, and it can be drafted to specifically address investment preferences. You can include language that prioritizes low-volatility investments, defines acceptable asset classes, or even establishes a risk tolerance profile. However, even with such language, the trustee still retains a degree of discretion. They can’t follow your instructions if doing so would violate their fiduciary duty or if the investments are clearly imprudent. For instance, requiring a trustee to invest 100% in cash, while low-volatility, would likely be considered a breach of duty as it wouldn’t generate sufficient returns to combat inflation or meet the trust’s long-term goals. Steve Bliss often advises clients to include a “direction of prudence” clause, which acknowledges the trustee’s duty while expressing the grantor’s general preferences.
What happened when my aunt didn’t specify investment goals?
My aunt, bless her heart, was a bit of a free spirit. She created a trust, naming her brother as trustee, but she never really bothered to specify what she wanted done with the funds beyond “take care of the grandkids.” Her brother, a retired accountant, was a bit of a gambler. He decided to invest a large portion of the trust in a highly speculative tech stock. For a while, it did well, but then the bubble burst, and the trust lost a significant portion of its value. The grandkids were understandably upset, and a lengthy legal battle ensued. It was a mess that could have been avoided with clear instructions and a well-defined investment strategy. It highlighted the importance of not only *creating* a trust but also carefully considering the details.
How did a clear plan save my neighbor’s trust?
My neighbor, Mr. Henderson, was a meticulous planner. He worked with Steve Bliss to create a trust that explicitly prioritized capital preservation and income generation for his wife. The trust document outlined a specific asset allocation strategy, emphasizing low-volatility investments like bonds and dividend-paying stocks. When Mr. Henderson passed away, his wife was understandably worried about managing the finances. However, the clear instructions in the trust allowed the trustee to implement the pre-defined investment strategy without hesitation. The trust continued to generate a steady income stream, providing my neighbor’s wife with the financial security she needed. It was a testament to the power of proactive planning and a well-drafted trust. It’s a perfect example of how specifying investment preferences, *within the bounds of fiduciary duty*, can provide peace of mind and ensure that your wishes are carried out.
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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.
● Free consultation.
Services Offered:
- living trust
- revocable living trust
- estate planning attorney near me
- family trust
- wills and trusts
- wills
- estate planning
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “How do I make sure my pets are taken care of after I’m gone?” Or “Can I get reimbursed for funeral expenses from the estate?” or “Can a living trust help me avoid probate? and even: “Can I keep my car if I file for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.