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11/14/2010
David M. Frees, III
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Avoiding Pennsyvlania Trustee Mistakes # 3 Failing to Follow The Prudent Investor Rule





Pennsylvania Trustee Mistake Part 3

Failing To Follow The Prudent Investor Rule

 Pennsylvania law used to be governed by the Prudent Man Rule. Under that law, if you were a trustee it was easy to comply and you had to really mess the investments up to be liable to beneficiaries. However, today, under the Pennsylvania Prudent Investor Rule the fiduciary (trustee or trustees) has specific duties to prudently invest according to the law, and to protect the trust beneficiaries based on thier needs, the trust document, and the law. Pennsylvania trustees must exercise reasonable care, skill and caution in investing and managing the trust's assets and to invest according to modern portfolio theory. If you fail, as trustee, to follow the duties or fail to exercise reasonable care, skill, or caution you may be surcharged or be held personally liable for the actions you took.

 So how do you protect yourself? Well, unless you are a skilled and professional investor, you might want to delegate your investment of trust assets to a professional. In that case,you will not be held personally liable provided that you initially used prudence and due diligence in selecting the advisor, developing an investment plan, and monitoring his or her performance. 

 You can also limit your liability by following the notice provisions under the Pennsylvania Uniform Trust Act. If this sounds too difficult you might want to consider whether or not you should act as a trustee or whether you should hire a professional trustee to provide these services. Many individual trustees fail to follow these rules at their own peril. And, even if you wish to act as a trustee, consider having a consultation with legal counsel to make sure that you get off on the right foot and start following the trustee rules and laws from the beginning of the trust administration.

See all ten of our articles on How To Avoid The Most Common Mistakes Trustees Make:

Avoiding Trustee Mistakes No. 1: Trustees Failing To Understand The Trust Language

Avoiding Trustee Mistakes No. 2: Trustees In Trouble Making Early Distributions

Avoiding Trustee Mistakes No. 3: Trustees Failing To Follow The Prudent Investor Rule

Avoiding Trustee Mistakes No. 4: Trustees Failing To Follow The Uniform Trust Act

Avoiding Trustee Mistakes No. 5: Trustees Failing To Follow The Principle And Income Act

Avoiding Trustee Mistakes No. 6: Trustees Failing To Communicate Properly

Avoiding Trustee Mistakes No. 7: Failing To Properly Reform, Amend, Or Terminate

Avoiding Trustee Mistakes No. 8: Failing To File Tax Returns Or To Seek Professional Assistance

Avoiding Trustee Mistakes No. 9: Failing To Understand The Role Of Multiple Trustees

Avoiding Trustee Mistakes No. 10: Trustees Failing To Do The Job




David M. Frees III
dfrees@utbf.com
610-935-9010

Call David Frees for a trustee consultation to avoid liability as a trustee of a Pennsylvania trust. We have offices in Malvern, Phoenixville, and West Chester and we serve the Main Line, Exton, Chester County and surrounding counties.
 

Category: Executor, Trustees and Probate

Labels: living trust mistakes Malvern trust lawyer PA trust PA trust attorney Pa trust lawyer PA trustee PA trustees PA trusts Pennsylvania living trusts Pennsylvania trust Pennsylvania trust attorney Pennsylvania trust lawyer pennsylvania trustee Pennsylvania trustee mistakes Pennsylvania trustees Pennsylvania trusts Phoenixville trust lawyer protecting living trust trustee liability trustee mistake West Chester trust lawyer


David M. Frees is Chairman of the Trust, Estates, and Wealth Preservation section of Unruh, Turner Burke and Frees with offices serving all of South Eastern Pennsylvania including Chester County, Montgomery County, Berks and Bucks counties, Philadelphia and Lancaster counties.

David FreeDavid M. Frees IIIs is rated highly by Martidale.com and has attained the highest rating by AVVO of 10 (Superb) on a scale of 1-10.


David meets with many clients each week and in order to give them his full attention, he is not always available to reply immediately to cell phone or email requests.  Immediate assistance can always be reached at 610-933-8069.
David M. Frees III
dfrees@utbf.com
610-9338069

David Frees is a prolific author on legal topics and in addition to the articles and blogs featured on this site, please feel free to view his postings at http://www.utbf.com/trust-estate



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