The question of whether a trustee can delegate authority to a financial advisor is a frequent one, and the answer, as with many legal matters, is nuanced and depends heavily on the terms of the trust document itself, as well as applicable state laws; generally, a trustee *can* delegate certain investment-related functions, but not the core fiduciary duties.
What are the limits of a trustee’s delegation powers?
Trustees are held to a very high standard of care, often referred to as the “prudent investor rule.” This rule requires trustees to act with the same care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with such matters would use. While trustees aren’t expected to be financial experts, they *are* responsible for overseeing the trust’s investments. Delegation isn’t about shirking responsibility; it’s about leveraging expertise. However, most states—like California, where Steve Bliss practices—restrict delegation to *investment* functions. A trustee cannot delegate core duties like distributing assets, accounting to beneficiaries, or making decisions about the beneficiaries themselves. According to a recent study by the American Bar Association, approximately 68% of trusts utilize some form of delegated investment authority.
What happens if a trustee delegates too much authority?
I remember old Mr. Henderson, a retired carpenter who established a trust for his grandchildren. He named his nephew, a well-meaning but financially naive man, as trustee. The nephew, overwhelmed by the responsibility, simply handed over *all* investment decisions to a financial advisor without adequately overseeing their actions. The advisor, unfortunately, had a high-risk investment strategy that ultimately led to significant losses. The beneficiaries sued, and the nephew, as trustee, was held personally liable for the losses because he had abdicated his fiduciary duty. This illustrates a critical point: delegation must be accompanied by reasonable oversight. A trustee is expected to monitor the advisor’s performance, review reports, and ensure the investments align with the trust’s objectives and the beneficiaries’ needs; the key is to retain *supervisory* control.
How can a trustee properly delegate authority?
The proper way to delegate involves a well-drafted delegation agreement. This agreement should clearly define the scope of authority granted to the advisor, specifying what investment decisions the advisor can make independently and which require trustee approval. It should also outline reporting requirements, ensuring the trustee receives regular updates on investment performance and strategy. Furthermore, the trust document itself may contain specific provisions regarding delegation. A qualified estate planning attorney, like Steve Bliss, can help draft or review these documents to ensure they comply with state law and protect the beneficiaries’ interests. A good delegation agreement is more than a legal formality; it’s a safeguard against potential liability and a framework for responsible trust administration. According to the Uniform Trust Code, a trustee’s delegation must be in writing.
What if everything goes right with delegation?
My client, Sarah, a busy physician, established a trust for her two young children. She knew she didn’t have the time or expertise to manage the trust’s investments effectively. She worked with Steve Bliss to draft a comprehensive trust document and a detailed delegation agreement, granting a qualified financial advisor the authority to make investment decisions, but retaining oversight responsibilities. The financial advisor, working under Sarah’s clear guidelines, consistently generated strong returns, allowing the trust to grow significantly. Years later, when it was time to distribute funds for her children’s education, the trust had more than enough to cover their expenses. Sarah’s foresight and Steve’s expertise had created a secure financial future for her family. This success wasn’t accidental; it was the result of careful planning, clear communication, and responsible delegation of authority, all guided by sound legal principles and best practices.
“Proper delegation isn’t about avoiding responsibility; it’s about maximizing expertise and achieving the best possible outcomes for the beneficiaries.” – Steve Bliss, Estate Planning Attorney
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
banckruptcy attorney
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “What is the difference between a testamentary trust and a living trust?” Or “What are the duties of a personal representative?” or “What if a beneficiary dies before I do—what happens to their share? and even: “What is the difference between Chapter 7 and Chapter 13 bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.