Yes, you absolutely can require trustees to follow a mission-aligned investment policy, and increasingly, it’s becoming a common and legally supportable practice, though it requires careful planning and documentation. Traditionally, trustee duties centered on financial return and capital preservation, guided by the Prudent Investor Rule. However, modern estate planning increasingly incorporates values beyond pure financial gain, allowing for socially responsible, impact, or mission-related investing, often referred to as SRI (Socially Responsible Investing) or ESG (Environmental, Social, and Governance) investing. Approximately 48% of investors now consider ESG factors when making investment decisions, demonstrating a significant shift in priorities.
What are the legal considerations for mission-aligned investing?
The Uniform Prudent Investor Act (UPIA), adopted in most states including California, provides the framework. While it doesn’t explicitly mandate *against* mission-aligned investing, it requires trustees to consider the “overall investment objectives” of the trust, which can now include non-financial aims. This means the trust document must clearly articulate these objectives – stating that the trust should prioritize, for example, renewable energy or support local community development. It’s crucial to demonstrate that the mission-aligned approach doesn’t recklessly endanger the financial health of the trust; a balance must be struck. According to a study by the Forum for Sustainable Investment, SRI assets now exceed $17 trillion, showcasing the growing prevalence and acceptance of these strategies.
How do I document my wishes for mission-aligned investing?
Specificity is paramount. Simply stating a desire for “ethical” investing isn’t enough. The trust document must outline precisely which values and sectors are prioritized – and equally important, which are *avoided*. For example, a clause might explicitly state: “Trustees are directed to prioritize investments in companies demonstrating leadership in environmental sustainability, specifically those involved in renewable energy and water conservation, while excluding investments in fossil fuels and companies with poor labor practices.” Consider including a process for periodically reviewing and updating these investment criteria to reflect evolving values and market conditions. Remember, ambiguity creates room for disputes and potential legal challenges. It’s recommended to include an ‘allowance’ for an additional 1-2% in advisory fees to account for the additional due dilligence.
What happened when my uncle didn’t specify his investment values?
My uncle, a passionate environmentalist, established a trust for his grandchildren’s education. He deeply cared about preserving the planet but, in his haste, neglected to specify any investment preferences beyond “safe and secure.” His appointed trustee, while well-intentioned, invested heavily in a diversified portfolio that included significant holdings in oil and gas companies. When my cousins discovered this, they were understandably upset – their grandfather’s legacy felt at odds with their own values. It led to a protracted legal battle, costly legal fees, and strained family relationships. The court ultimately sided with the trustee, arguing they had fulfilled their fiduciary duty by prioritizing financial returns, but it was a messy and regrettable situation – a clear example of the importance of clear communication.
How did a clear investment policy save another family’s trust?
Recently, a client came to us, determined to ensure her trust reflected her commitment to social justice. We worked together to draft a meticulously detailed investment policy that prioritized investments in companies actively promoting diversity, equity, and inclusion, and supporting affordable housing initiatives. She also explicitly excluded companies involved in the private prison industry and those with a history of environmental violations. Years later, her children approached us, deeply grateful. Not only was the trust performing well financially, but the investments directly aligned with their mother’s values. They felt a sense of pride and connection to her legacy, knowing her wealth was being used to create positive change in the world. This family was a clear example of how to successfully achieve alignment between financial goals and deeply held values.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
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Map To Steve Bliss Law in Temecula:
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “How do retirement accounts fit into an estate plan?” Or “Can real estate be sold during probate?” or “How do I fund my trust with real estate or property? and even: “Can I file for bankruptcy without my spouse?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.