Individual Trustees

A Trustee’s Duty to Independently Monitor Delegates UPIA §9(a)(3)

The Uniform Prudent Investor Act at Section 9(a)(3) directs, “A trustee shall exercise reasonable care, skill and caution by periodically reviewing the agent’s actions in order to monitor the agent’s performance and compliance with the terms of the delegation.” Many trustees implicitly trust the investment advisor to whom they (or their predecessor) delegated investment duties. They…

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UPIA §2(b) – Duty to Monitor Risk and Return

The preamble to the Uniform Prudent Investor Act notes, “The tradeoff in all investing between risk and return is identified as the fiduciary’s central consideration.” For most trustees determining the return that was produced by the assets held in trust is a fairly straightforward exercise.

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UPIA §7 re Duty to Pay Only Fair Fees

“Wasting beneficiaries’ money is imprudent. In devising and implementing strategies for the investment and management of trust assets, trustees are obligated to minimize costs” (National Conference of Commissioners on Uniform State Laws). Duty to Pay Only Fair Fees Section 7 of the Uniform Prudent Investor Act states, “In investing and managing trust assets, a trustee…

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Johnny Depp v. TMG: What are a business manager's duties of care?

business manager's duties of care

The Question: What standard of care and what attendant duties does a business manager owe to their client? The Answer: It depends on what roles and services the business manager fulfills for their client. A good argument can be made that the business manager owes a similar fiduciary standard of care to their clients as…

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Reconciling the Duty to Diversify

Diversification

When is the trust capital adequately diversified? Is owning five single family houses in Long Beach, California diversified? Is owning one index mutual fund that holds over 1,000 securities diversified? And what is the trustee to do if the asset that originally funded the trust was NOT diversified?

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UPIA §2(c)(6) re Other Resources of the Beneficiary

prudent administration for a trustee

The Conundrum: Question: Should the investment policy and distribution rate from a trust be informed by assets held by the beneficiary that are outside the trustee’s responsibility or control?   Predictably the answer is… it depends. However, in most cases it is fair to say, “The trustee is obligated by statute to consider other assets, income,…

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UPIA §2(b) re Duty to Balance Risk and Return

Duty to Balance Risk and Return

The preamble to the Uniform Prudent Investor Act notes, “The tradeoff in all investing between risk and return is identified as the fiduciary’s central consideration.” For most trustees determining the return that was produced by the assets held in trust is a fairly straightforward exercise. But measuring risk can be more problematic. What’s the Risk?…

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UPIA §9 re Prudent Delegation of Investment Duties

prudent delegation of investment duties

Many trustees implicitly trust the investment manager to whom investment duties have been delegated. They trust that the manager’s strategy is reasonable. They trust that the return the manager produced was appropriate given the level of risk that was taken. They trust that the manager’s representation of being “above average” is supported by facts. This…

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