Volume 2, Issue 1

February 2026

Welcome to the final installment of our newsletter series dedicated to the key responsibilities of successor trustees. In previous issues, we covered the Duty of Loyalty and the Duty of Care. This month, we conclude our discussion with the Duty to Invest, a critical component of your role in managing the trust effectively.

What is the Duty to Invest?

The Duty to Invest requires you to manage and invest the trust’s assets prudently and in a manner that aligns with the terms of the trust and the best interests of the beneficiaries. Here are the essential aspects of this duty:

1. Investment Strategy Development: Create a clear investment strategy that reflects the objectives of the trust and the needs of the beneficiaries. This includes considering factors like risk tolerance, income requirements, and long-term growth potential.

2. Diversification of Assets: To mitigate risks, it's crucial to maintain a diversified portfolio. This means spreading investments across various asset classes (e.g., stocks, bonds, real estate) to buffer against market volatility.

3. Regular Monitoring and Reevaluation: Commit to ongoing monitoring of the performance of the investments. Regularly reevaluate the initial investment strategy and make necessary adjustments based on market conditions or changes in the beneficiaries’ needs.

Why is the Duty to Invest Important?

- Ensuring Financial Security: A well-managed investment strategy is vital for ensuring the financial security of the trust, enabling beneficiaries to receive distributions as intended.

- Legal Compliance: Adhering to this duty helps ensure that you are compliant with fiduciary standards and avoids potential claims of mismanagement from disgruntled beneficiaries.

- Maintaining Beneficiary Confidence: A proactive approach to investing fosters confidence among beneficiaries, assuring them that their interests are being prioritized and managed effectively.

Practical Steps to Uphold the Duty to Invest

1. Conduct a Needs Assessment: Begin by assessing the beneficiaries' financial situations, goals, and any specific requirements they may have. This assessment will guide your investment decisions.

2. Establish an Investment Policy Statement (IPS): Create an IPS that outlines the investment strategy, objectives, guidelines for risk tolerance, and criteria for asset selection. The IPS should include beneficiary needs, ages, and purposes of distributions that the trust will be required to meet. Ensure this document is consistently referenced and updated as needed.

3. Utilize Professional Expertise: When in doubt or faced with complex decisions, consult with financial advisors or investment managers who can provide valuable insights and expertise in asset management. A well-designed trust may mitigate a trustee’s duty to invest when professional guidance is sought.

4. Stay Informed on Market Trends: Keep abreast of market trends and economic conditions that may impact investment performance. Regularly reviewing relevant literature and attending industry seminars can enhance your understanding. This again is where a professional advisor can assist a well-meaning trustee.

5. Document Your Investment Decisions: Maintain thorough records of your investment decisions, including the rationale behind each choice. Good documentation supports transparency and accountability in your role. Records will also assist with expedient annual reporting to beneficiaries.

6. Review and Adjust Regularly: Schedule periodic reviews of the investment portfolio to evaluate performance. Make adjustments as necessary to align with the trust’s evolving needs and market dynamics.

Looking Ahead

As we wrap up our series on the major duties of a successor trustee, we hope you have gained valuable insights into the Duty of Loyalty, Duty of Care, and Duty to Invest. Understanding and internalizing these responsibilities is crucial for effective trust management and ensuring that you serve the beneficiaries' best interests.

If you have any questions or need personalized guidance regarding your trustee responsibilities, or if you are unsure your trust and estate plan will properly guide your successor trustee, then please contact us. We are committed to supporting you in your essential role as a successor trustee and having an estate plan that will work for your family.