Law Offices of Frye & Vazquez, P.L.
Call Today. 305-508-5749 | 877-421-5473

What is the prudent investor rule?

When you are a beneficiary or party to a trust in Miami, you and other interested parties may find it frustrating that all of the power related to the management of the trust seemingly lies with the trustee. While the settlor of the trust may have designated certain assets and property to pass to you, that will only happen when the conditions stipulated by the governing instrument are met. Until then, the responsibility to oversee (and hopefully, to grow) those assets remains with the trustee. If the trust article stipulates that its assets are to generate income, then the trustee may tasked with investing them. Yet how much discretion does he or she have in doing so?

When investing trust assets, a trustee is required to adhere to the prudent investor rule. According to Florida's state statutes, that means he or she must do the following:

  • After being named trustee, review the trust's current investment portfolio and retain or dispose of any investment according to the provisions of this rule.
  • Invest and manage the investment assets of a trust as any prudent investor would given the purposes, terms, distribution requirements and other circumstances created by the trust article.
  • Diversify all trust investment unless the trustee reasonably believes doing so will not accomplish its stated purposes.
  • Pursue an investment strategy with both the reasonable production of income and the safety of capital in mind.
  • Make investments based upon factors such as general economic conditions, the potential for inflation, the anticipated tax consequences, how individual actions may affect the trust's complete portfolio, the expected return and the duty to incur only reasonable costs.

Keep in mind that this rule is meant to be a test of the trustee's conduct and not based upon the overall performance of his or her investments. 

No Comments

Leave a comment
Comment Information

What Our Clients Are Saying

  • I have known and worked with Austin Frye and his team since 2008. In that time he has helped serve both my business and personal legal planning needs. From guidance on reviewing and keeping shareholder and state documentation up to date... - Robert
  • It is difficult enough to cope with the emotional challenges of closing a parent's estate, and when you are also faced with the issue of your parents having insufficient documentation, and being remote from your siblings… - Zara L.
  • Austin Frye provided legal services to my father while alive and to his estate after his death; when showing the EP docs his firm prepared to other professionals (lawyers, financial advisors, accountants)… - Mark S
  • I've been a client of Austin Frye's for over 10 years. In that time, he's handled my estate/trust planning and asset protection as well as complicated business deals. - Leslie
  • Mr. Frye recently set up a complicated special needs trust for my son and, as usual, did a great job explaining it and in putting our minds at ease about our son's future well-being. - Dr. Howard
Read More...
  • NYSBA
  • Massachusetts Bar Association
  • The Florida Bar 1950
  • CFP
  • Florida Bar Elder Law Member
  • Academy Of Florida Elder Law Attorneys
  • Florida bar Business law Member
  • NAELA National Academy of Elder Law Attorneys, Inc.
Email Us For a Response

Contact Us For Personal Attention To Your Legal Matter

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Location

Get In Touch With Us
20900 W. Dixie Highway
Aventura, FL 33180

Toll Free: 877-421-5473
Phone: 305-508-5749
Map & Directions