In Minnesota, administrators of family trusts, often called “trustees” have a lot of power. Sometimes, they are in control of millions, or even tens of millions, of dollars in assets. With this power comes a lot of responsibility. Minnesota trustees have an obligation not only to preserve the property that is in the trust but also to ensure that the trust grows. This is only a just expectation of those heirs and beneficiaries who will ultimately inherit the wealth contained in the trust.
Not surprisingly, trust litigation can arise when a trustee does not handle the trust properly and thereby causes it either to lose money or even simply grow at a slower than normal rate. In Minnesota, a trustee has an obligation to act as a “prudent investor,” meaning that he or she has an obligation to make smart money decisions when it comes to the trust.
This rule actually offers trustees more flexibility than that afforded by prior rules. The trustee need not be afraid to make what some would call risky investments, so long as he or she has some reasonable grounds for doing so. Moreover, a trustee can feel free to use the assistance of other experts when making investments. Finally, the trustee will not be judged on the poor performance of one investment so long as the trust, as a whole, is managed reasonably.
Still, the administrator of a trust has a duty to be informed about the various investment options before him or her and to make decisions based on that information. All of this must be done with the ultimate goal of protecting and growing the trust for the future generations. A Minnesota trustee who does not meet these basic responsibilities can be held accountable.