One very important rule in EPIC is Michigan’s Prudent Investor Rule.  The Prudent Investor Rule applies unless the terms of the Trust provide otherwise.  A Trustee is well advised to obtain the advice of a lawyer with expertise in Trust Administration to help determine the rules the Trustee must follow.

The Prudent Investor Rule states that a Trustee shall invest and manage Trust assets holding the Trustee to the standard of being a prudent investor. The prudent investor standard assumes that the Trustee has some level of sophistication as an investor greater than that of the average person.

TRUSTEE’S FIDUCIARY DUTIES UNDER MICHIGAN’S PRUDENT INVESTOR RULE:

1. Care, Skill & Caution: To satisfy the above standard, the Trustee must exercise reasonable care, skill, and caution. MCL §700.1502(1).

2. Total Return Investing: Standard of prudence applies to any investment as part of the total portfolio, rather than individual investments. MCL §700.1503(1).

3. Balance Risk & Return: MCL §700.1503(1).

4. No Investment is Off Limits: There are no categorical restrictions on investments.  MCL§700.1503(4).

5. Diversification: Trustee is required to diversify investments. MCL§700.1504.

6. Delegation: Fiduciary may delegate investments and management responsibilities. If effectively delegated the Trustee can reasonably rely on expert advisor’s input and recommendations.  MCL§700.1510.

To properly carryout the prudent investor duties under the law the Trustee must take into account the purposes, terms and distribution requirements expressed in the Trust as well as other circumstances affecting the Trust beneficiary.

For a free consultation about Elder Law, Care Advocacy, Estate Planning or any of the information contained in this article, contact Mall Malisow & Cooney, P.C. toll free at (866) 699-1800 or online at www.theeldercarelawfirm.com.