The Dallas Business Journal’s recent article, “Fiduciary investment management and corporate trustees,” explains that one of the many benefits of appointing a corporate trustee/professional trustee, is that they are held to a fiduciary standard of care when managing a trust investment portfolio. That means that they’re legally required to place their client’s interests above their own when making investment decisions. While this may seem like a no-brainer, it’s not the rule for all financial professionals.
While an individual trustee is held to the same fiduciary standard of care, they often don’t possess the same level of professional investment expertise and resources that a corporate trustee does.
There are a few factors to consider from an investment standpoint, when selecting a corporate trustee. The most important consideration is that a corporate trustee should take the time to do an in-depth analysis to fully understand the client’s short-term and long-term goals, as well as the clients’ current situation and foreseeable liquidity needs and risk tolerance. This will give the trustee the necessary foundation, upon which to build a prudent and diversified investment portfolio.
Deciding on the right investment allocation is just the initial step in the continuing process of managing the investment portfolio appropriately. In addition to looking at an investment’s historical performance, he or she should perform ongoing research and oversight to gather information and implement decisions, based on the future economic outlook with respect to current market conditions. The trustee should practice due diligence in implementing any new investments and continue overseeing a client’s existing investments to be certain the objectives continue to be in sync with those of the trust.
Everyone’s circumstances change, and developing a close relationship with the chosen trustee, and keeping the trustee up-to-date about important events and happenings will help ensure the trust is able to support the beneficiaries in a time of need, while still being able to accomplish long-term goals.
The appointed trustee needs to work very closely with the client and beneficiaries over the life of the trust. Therefore, it’s critical to research a bank or trust company, before you settle on your selection and feel comfortable with the party responsible for overseeing the relationship.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Dallas Business Journal (September 24, 2018) “Fiduciary investment management and corporate trustees”