Fiduciary Investments

Managing investments for a trust comes with unique responsibilities. Our experience managing to these higher standards has resulted in proven success for our clients.

Specifically, trust investment managers must follow local as well as federal regulation which govern the fiduciary investment process to protect trust beneficiaries.

Uniform Trust Code

Thirty-four states have adopted the Uniform Trust Code which includes requirements of prudent investments processes for trusts. Other states, such as California, have enacted similar laws under their probate code. We have experience managing to these standards to support our trust clients.

A key facet of the various laws and regulations is the Prudent Investor Rule. The Prudent Investor Rule requires the trustee to consider the following:

  • The needs of all beneficiaries
    (both current and future beneficiaries must be treated equally)
  • The need to preserve the estate
  • The need for income
  • The need to diversify investments
    (no large concentrations)
  • The need to incorporate the overall trust portfolio composition
  • The ability to delegate to third parties for investment advice
  • The need for scrutiny of higher risk investments
    (primarily non-publicly traded investments)

Objective Setting

As a trustee exercising investment powers for a trust, we start by setting a clear investment objective that aligns the investment strategy to the needs of the trust.

We consider the following:

  • Understanding trust terms and beneficiary circumstances
  • Age of grantor, spendthrift beneficiaries, medical or education funding, etc.
  • Trust asset size
  • Risk appetite
  • Return goals
  • Liquidity
  • Income compared to distribution needs
  • Investment time horizon
  • Tax brackets

Review and Rebalance

Proper stewardship of your trust's assets includes regular review and monitoring of the investments and incorporating any changes to the trust's needs within the portfolio. Each trust is reviewed annually and formally documented by a trust officer to ensure the appropriateness of the investment portfolio. A dedicated portfolio manager provides financial markets expertise during the review and rebalances the portfolio, as appropriate, on a quarterly basis.

We include the following considerations when reviewing our client portfolios:

  • Macro-economic conditions and inflation
  • Role of each investment in the portfolio
  • Expected total return
    (income and capital appreciation)
  • Tax consequences
  • Other resources of the beneficiaries
  • Need for liquidity, income, capital preservation and appreciation
  • Special purpose of the asset to the trust
  • Invest in any kind of property or type of investment consistent with the act
  • Duty to diversify/concentration
  • Reasonable and appropriate costs related to assets

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