Trustee Concerns: Portfolio Management
It is not unusual for a non-professional person to be named as a trustee in a family trust. Family members are usually happy to serve as a trustee if asked. Often times the trust may be for the minor children of a deceased family member. Or, the trust might be for a disabled person. Non-professional trustees might be nervous about making investment decisions regarding the trust portfolio.
In Washington, the investment of trust funds is governed by RCW Chapter 11.100. A trustee is clearly a fiduciary, and owes special duties to the beneficiary. The requirements/responsibilities of the trustee are sometimes spelled out in the trust. The trust is the first place to look to determine the legal obligations of the trustee. If the trust itself does not specify the trustee’s obligations, then look to RCW Chapter 11.100, which specifies the duties of the trustee.
The Washington statue says the trustee should consider the overall portfolio of assets and apply a total asset management approach. The section goes on to identify nine different factors that a trustee should consider when applying this approach, including general economic conditions, length of term of the investments, liquidity needs, income and safety of the capital, taxes, etc. If you are a non-professional trustee, you will probably want to document your considerations when making investments.
If you have further questions or concerns, discuss them with your investment advisor and/or your lawyer.
This information is general in nature and should not be relied upon for your specific circumstances. For information, questions, or comments, please contact Douglas J. Engel or Kathryn S. Kumar.