If you have been appointed to be the Trustee of someone else’s Trust, then you need to know the legal standards that you must control the Trust assets under. Failure to properly control the Trust assets can lead to personal liability for mistakes.
The first thing that you need to be aware of is that a Trustee acts as a fiduciary for the beneficiaries of the Trust. Everything you do with the Trust and its assets must be done for the benefit of the beneficiaries. However, you do not get to decide how to proceed for the benefit of the beneficiaries in a vacuum. Your state has roles for the management of investments such as The Uniform Prudent Investor Act which sets forth standards that you must follow when handling and investing the Trust assets.
The Uniform Prudent Investor Act and similar laws use modern portfolio theory, which can be difficult for non-professionals to grasp. In short it requires you to have a diversified portfolio that takes into account the investment objectives and risk tolerance of the beneficiaries.
Fortunately, Trustees can hire professionals to assist them. Talk to an attorney about how you can obtain professional Trust administration help.
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