Would you like help setting up a special needs trust in Chicago? Creating trust funds can be an effective wealth preservation tool to protect descendants. Since fiduciaries manage them, they tend to perform better than most funds. Furthermore, they’re regulated by law in the US, meaning you don’t have to worry about them.
What Is the Prudent Investor Rule
The prudent investor rule is similar to the prudent man ruling established in 1830. At the time, there was a case involving Harvard College vs. Amory, and it went against the school. John McLean had left a sizeable estate for his wife, but Francis Amory managed it.
The remaining funds would go to Harvard after Mrs. McLean passed, but the fund fell in value by then. As a result, they took Amory to court and charged him with speculative investments. However, Judge Samuel Putnam ruled in favor of Amory and declared a trustee must invest as a prudent man. Even prudently made investments won’t always perform well, meaning they can diminish. Amory had invested in several manufacturing and insurance companies, which were decent choices.
Uniform Prudent Investor Act
The American Law Institute reinstated the Law of Trusts for the third time in 1992. As part of this reinstatement, they included the Uniform Prudent Investor Act. This allowed fiduciary investments to invest in a more diversified portfolio. Incorporating modern investment theory made it possible for them to include newer investments. Actually, it made it a requirement to mitigate any risk involved with a single asset.
Life’s Plan, Inc. helps set up fiduciary investments in Chicago. Visit them to learn more.