Not all trustees possess the same skills to administer a trust for the benefit of the beneficiaries. Corporate and individual trustees must perform differently when administering a trust, and should engage in experts if they do not possess the skills required.
I recently gave more insight into these types of cases.
“Corporate trustees are professionally trained and supervised to administer trust. If a trust administered by a corporate trustee has unique assets that fall outside of the expertise of the corporate trustee, under the prudent investor rule, a corporate trustee may engage a third-party expert to assist in the administration and management of unique asset so long as the corporate trustee prudently engages the expert and supervises their administration and management of the asset.
“In the case of the individual trustees, if the individual has no experience, for example managing a portfolio of securities, the individual trustees should engage in expert to advise the trustee in the management of the trust property. A registered investment advisor who is a fiduciary should advise the trustee on prudent management the portfolio for the benefit of the beneficiaries. Individual trustees with no asset management experience that failed to engage experts expose themselves to undo liability as trust beneficiaries may claim the trustee failed to prudently manage the trust property. In some cases, grantor’s name their attorneys, accountants, or trusted family advisors who have experienced in managing trust professionally.
“Individuals serving as a trustee with certain special training are considered to have special skills. An individual trustee with special skills is required to apply those skills in the administration and management of trusts. A trustee with special skills that fails to apply those skills in the administration and management of the trust may be liable by trust beneficiaries.”
About Charles W. Ranson: Charles is a wealth management expert witness with decades of experience in financial services. He provides expert witness and litigation consulting services to attorneys who represent clients involved in legal disputes between financial institutions, trustees, beneficiaries, private foundations, family offices and ultrahigh net worth investors.
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Charles W. Ranson | Wealth Management Expert Witness
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