In the current unprecedented times we are living in, a person who is designated acting Trustee of an estate may face a substantial amount of uncertainty and difficulty in determining sound financial moves.
With the ongoing economic crisis shuttering numerous businesses, forcing bankruptcies, and leaving workers uncertain of their financial futures, certain assets are on a steep and rapid decline. With the fear and anxiety of an uncertain future, heirs are demanding discretionary distributions from trusts more than ever. However, regardless of financial climate, a Trustee of an estate in California is bound by what is known as the Uniform Prudent Investor Act.
This act, set out in Probate Code section 16047, states that an estate trustee should handle assets, invest, manage, and diversify “as would a prudent investor.” This means that even though we are living in completely uncharted territory, it is still the duty of a Trustee to look at every bit of information available, and consider a trust portfolio as a whole before making any moves. Every decision should be considered part of an overall investment strategy, and be performed with the expectation or goal of a defined outcome.
The only time an estate Trustee may veer away from the Uniform Prudent Investor Act is when specific provisions for doing so have been set out in the trust documents. Any person who is designated acting Trustee of a California estate, especially during the current situations, should consult with an attorney prior to making any uncertain moves that could have serious detrimental consequences.