Investing Florida Estate Assets in A “Snail Economy”: what’s a prudent Florida executor to do?

Are you concerned about how assets and property in a Florida estate are being invested?   Are you a beneficiary or heir or family member to a Florida estate which is supposed to give you your inheritance?  Or maybe you are the Florida executor, the Florida personal representative of the Florida probate and want to know how to invest.  I’m sure that your Florida probate lawyer has informed you about how an estate in Florida is administered.  But maybe it’s not clear how estate assets should be invested in Florida.  Florida law, after all, has a prudent investor rule, which requires a Florida fiduciary to invest “prudently.”  Florida’s prudent investor rule applies to executors: those fiduciaries who run estates or administer estates or who administer a Florida probate.   In Florida, an executor is called a “personal representative.”   So, how does a Florida estate, or a Florida executor, invest estate assets and estate property, particularly in today’s “snail economy?”   Estate beneficiaries want their money.  Family members and heirs want their inheritance.  Widows and widowers want to know that there are assets in the Florida probate to take care of them. Probate attorneys want to get paid.  And Florida executors want to run the Florida estate properly and don’t want to get mired in a probate lawsuit or an estate lawsuit.  This past weekend, Barron’s, the weekly financial newspaper published by Dow Jones, pictured a snail on its cover and described the US economy as one that would grow at a snail’s pace over the next 20 years.  It suggested that this growth rate was smaller than what it used to be around WWII, and that this could be bad news for stocks.  So, what is a Florida executor to do?  Here are a few tips to discuss with your Florida estate lawyer or your Florida probate attorney.  Whether the estate is is Palm Beach Gardens, Florida, Boca Raton , or Delray Beach, these thoughts should assist.  They may be a great starting point to have a discussion with your Broward County probate lawyer or your Palm Beach County estate lawyer.  One, cash is king.   You don’t have to be 100% invested in stocks and bonds. Your estate will need money to pay creditors, pay attorneys fees and expenses like funeral expenses, ongoing estate administration expenses, the IRS, and debts of the person who died (like last power bill, HOA fees, credit card bills, etc.) and begin to make any small distributions for inheritances.  Two, if a large portion of the estate is “going” to a trust or a particular individual, like a marital trust, a son or daughter, or widow or widower, or a particular heir, consider having your probate lawyer involve that person, or their Florida probate lawyer, or Florida estate lawyer, in a discussion of how they want their future inheritance invested.  Three, if you inherit large blocks of stock, or shares of stock which are more than 5% of the estate’s assets, sell. Diversification is important for Florida estates.  While you don’t have to sell on a dime, you should at least have a plan.  Four, remember that estates are not intended to be around forever.  You should do the estate’s business, wrap it up and close it down:  make distributions to the creditors, service providers and ultimately the beneficiaries and heirs.  So, there’s an argument to be made that a Florida estate is not your typical long term investor.  That doesn’t mean that you don’t invest in stocks or bonds.  It does mean, however, that you consider what you are doing, why you are doing it and have a strategy: a plan.   Prudent investing in Florida is important.   After all, although cash is king, it’s not God.   Keeping everything in cash when you don’t need to, in a bull market like we have seen over the last 12 months, means that you, as a Florida executor, did not “catch” the huge gains the US market gave all investors.  But that’s something to discuss with your Florida estate lawyer, or your Florida probate litigator.  Advocate hard. Litigate smart.