Do you know how to develop a portfolio that complies with Florida’s Prudent Investor Rule?

Answer

A majority of states, including Florida, have adopted the “Prudent Investor Rule.” A “prudent investor” diversifies the trust’s assets to obtain an investment strategy that incorporates suitable risk and return based on the projected needs of all beneficiaries and based on the responsibilities described in the trust document. A prudent investor either: 1) has the expertise to invest appropriately under the Prudent Investment Rule or 2) delegates this function to a professional investment agent. A prudent investor has a written strategic plan for investing and meets regularly with his or her attorney and investment advisor to be sure the plan is implemented and changed where necessary. Many investors in the 1990s did very well whether or not they had investment expertise. However, now that the market has been down for several years, determining appropriate fiduciary investments has become a very difficult decision. We are starting to see progressively more lawsuits being filed against trustees for violation of the Prudent Investor Rule.