Defending Florida Trustees in a Market Selloff or Panic: 4 steps for the Florida trustee

OK, so you are a trustee of a Florida trust and the stock market is in panic mode.  What’s a Palm Beach trustee to do amid a stock market selloff?  Maybe you were named the successor trustee of your mom’s revocable trust when she lived in Jupiter Island, or perhaps you are the trustee of your family’s irrevocable Florida trust with millions in it.  And your trust beneficiaries are texting you and calling your mobile phone as well as bugging you at the office.  How can a Florida trustee defend yourself against a stock market crash?  Here are4 steps or things to consider if you are the trustee of a Florida trust and the financial world around you is reeling.

1. Read (re-read) the Florida Prudent Investor Rule.   Florida law 518.11 is Florida’s prudent investor rule.  Know it.  Yes, it’s your guidepost.  Do you know what your dutiesare?  Do you know if your investing is complying with your fiduciary duties over the trust portfolio?   Can Florida’s Prudent Investor Rule 518.11 really HELP a Florida trustee if you were sued by a trust beneficiary.  Indeed.  Unless, of course, you ignored the prudent investor rule.
2. Read the Trust Document. What, if anything, does the Florida trust document which created the trust say about investing trust assets?   Has that language, if anyinvestment language is even in the Florida trust document, ever been changed by modification or reformation by a probate court order?  Know the rules.  Know your trust.  Yes, it may have been a while since you read the living trust which that Lake Worth probate attorney wrote for your father before he put  you in charge of your brother or sister’s trust.  But read it and re read it.
3. Knee Jerk Reaction is not a Strategy.  I know that you are probably sick and tired of hearing this, but don’t panic Boca Raton trustees.  Panic is not prudent.  React? Sure.  Reflect, understand? Yes.  But understand if the recent downturn has affected why you purchased stocks or investments in the first place.  Are there any other factorswhich make you press the “sell” button?
4. What’s Your Investment Strategy?.  So, remember the Florida Prudent Investor Rule of 518.11?  Well, it requires that you have an investment strategy as a Florida trustee.  Can you state it clearly? Do you understand it?  Well, if you are worried that your trust beneficiaries might sue you for stock market losses in the trust portfolio, you not only better have an investment strategy, but you better understand it….. and BEFORE you get called to the stand to testify in a Florida trust lawsuit.  How do the recent stocks and investments in your Florida trust investment portfolio fit into your prudent investor strategy? How does the recent sell off or market panic affect, if at all, yourFlorida prudent investor investment strategy?  

BONUS:  two more quick points about investing Florida trust money in a market selloff or panic:  1) if you are an executor of a Palm Beach estate, listen up!  You are also subject to the Florida Prudent Investor Rule, Florida Statute 518.11;  2) use the limitations notices, trustees, of Florida Trust Code 736.1008.

Is that a Florida trustee’s best defense against a trust beneficiary lawsuit Palm Beach?