Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Trustee’s Investment Strategy: Prudent Investor Rule vs. Legal List

Posted by William Byrnes on March 19, 2014


by Roland Ortiz

The fiduciary duty of a trustee must respond to the overall financial goals established by a trust.  The grantor typically provides guidelines of purpose of the trust at the same time allowing the trustee the ability to respond to changing beneficiary needs.  According to the trust, assets are disbursed or can be facilitated as providing life time income, or both.  The trustee is obligated to fulfill the fiduciary duties by proper administration of the trust.

In order to achieve proper fiduciary duty, a trustee is required to provide the beneficiary with performing investments but with consideration of overall risk.  Diversification provides performance while also reducing unsystematic risk.  There are two types of investment strategies which are used to provide this diversification: the Prudent Investor Rule or Legal List.

Read the article at http://www.advisorfyi.com/2014/02/trustees-investment-strategy-prudent-investor-rule-vs-legal-list/

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