Following a client’s wishes is usually the best approach to avoiding grief from a probate judge, she said, but sometimes it can get an advisor in trouble. A notable example, she says, is when a client instructs an advisor not to diversify concentrated investments, such as a closely held business.

“The language saying it is OK not to diversify can sometimes be inadequate to prevent a party who has been damaged from bringing a suit against a fiduciary,” the probate judges’ association leader said.

Sometimes, said Stewart, a probate judge will point to changing circumstances showing that although following the client’s directive not to diversify was wise at the time it was made, it proved dangerous to the investors’ and heirs’ wealth later.

When it comes to managing an estate’s portfolio, she said advisors should recognize that heirs may have different needs: Some may rely heavily on trust income for day-to-day expenses, while others are best served by keeping the money invested for the long term.

Fiduciaries frequently get into trouble when they yield to wishes of one beneficiary and ignore the wishes of another, she said.




 
 

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