I Need Help With A Trust (1 Viewer)

[Vincesanity]

I'm really looking for someone who specializes in trusts or has been through this exact situation. I've found lots of speculation and opinions but no facts yet.

A client of mine lost his brother about a month ago. He did not have a will so all his assets, life insurance, etc went to his estate. His 2 daughters, age 11 and 12, will be the beneficiaries. The family is in the process of setting up a trust for the 2 girls with the grandfather as the trustee. They would like the funds invested a certain way for growth. The feedback they are getting from the attorney is per the state of Texas it has to stay in a money market or municipal bonds. The reasoning is IF it was exposed to the "market" and IF the market fell the girls could come back and say " what happened to our money".

Does anyone know if this is true? Are the lawyers just trying to protect themselves? Can the money be invested in growth mutual funds, income funds, index funds, etc.?

 

[johnnycakes]

If the fiduciary did something stupid in investing the money then those lawyers would be correct. But the fiduciary standard does not say to avoid all risk... No need to limit investments to low- yielding money markets. Just don't load everything into one kind of investment so risk is concentrated... Spread the risk around and use a little sense in making your asset allocation and you should be fine.

 

[chet]

If the fiduciary did something stupid in investing the money then those lawyers would be correct. But the fiduciary standard does not say to avoid all risk... No need to limit investments to low- yielding money markets. Just don't load everything into one kind of investment so risk is concentrated... Spread the risk around and use a little sense in making your asset allocation and you should be fine.

Listen to JC.

In fact, if I were the girls, I'd sue the person that put it all in munis and money markets. Idiotic for kids.

And make sure you have a will if you have children.

 

[Vincesanity]

My thoughts as well, however I'm trying to figure out if they're getting bad advice because they're saying the state is limiting the investments.

 

[Sand]

If the fiduciary did something stupid in investing the money then those lawyers would be correct. But the fiduciary standard does not say to avoid all risk... No need to limit investments to low- yielding money markets. Just don't load everything into one kind of investment so risk is concentrated... Spread the risk around and use a little sense in making your asset allocation and you should be fine.

For an 8-10 year horizon something along the lines of a 50/50 stock bond split would be pretty decent, IMO. Some munis aren't a bad idea, either, as trusts get hit pretty hard on the income levels and taxation, if memory serves.

 

[GregR]

Close your eyes and let yourself fall over backwards, we'll catch you.

Edit to add: Oops, different kind of trust. Good thing, we really weren't going to catch you.