Absolutely, you can indeed prohibit investment in certain industries through trust terms, allowing you to align your wealth with your values even after you’re gone; this is a powerful way to express your ethical or moral beliefs and ensure your assets aren’t used to support activities you oppose.
What are Socially Responsible Investing (SRI) restrictions?
Socially Responsible Investing (SRI), or impact investing, is gaining traction, with assets under management exceeding $50 billion in 2023 according to the Forum for Sustainable and Responsible Investment. Many clients, like myself, come to me wanting to exclude industries like tobacco, firearms, fossil fuels, or even companies with poor environmental or labor practices. Trust documents can be specifically drafted to mirror these preferences. This can be achieved through negative screens, which exclude certain industries, or positive screens, which prioritize investments in companies meeting specific ethical criteria. The level of restriction can range from broad exclusions—like prohibiting all fossil fuel investments—to more nuanced approaches targeting specific companies based on their ESG (Environmental, Social, and Governance) scores. It’s crucial to articulate these desires clearly in the trust document to avoid ambiguity and ensure the trustee understands your intent.
How does a Trustee navigate ethical investing guidelines?
A trustee has a fiduciary duty to act in the best interests of the beneficiaries, which traditionally meant maximizing financial returns. However, courts are increasingly recognizing that beneficiaries’ values can be part of that “best interest” calculation, especially when those values are clearly stated in the trust document. According to a recent study by the National Center for Philanthropy, over 70% of high-net-worth individuals express a desire to align their investments with their values. The trustee must balance your ethical preferences with the need to generate reasonable returns. They might achieve this by investing in a diversified portfolio that excludes prohibited industries while still seeking profitable opportunities in other sectors. This could mean slightly lower returns, but it reflects your expressed values and can be legally defensible if properly documented. We have found, time and time again, clients are happy with a slightly reduced return to support their values.
What happened when a client didn’t specify their wishes?
Old Man Tiber, a man of simple pleasures and strong convictions, came to me years ago with a substantial estate, but never articulated what he didn’t want his money used for. He just wanted to provide for his grandchildren. After his passing, the trustee, his nephew, invested a significant portion of the trust funds in a large tobacco company—one of the most profitable investments at the time. His granddaughter, a passionate anti-smoking advocate, was understandably devastated. She argued that the investment directly contradicted her grandfather’s known health concerns and his private wishes. The ensuing legal battle was costly and emotionally draining. The courts, while acknowledging her distress, found the trustee had acted within the bounds of the vaguely worded trust document, prioritizing financial return. It was a painful lesson for the family, and a testament to the importance of clear, unambiguous instructions.
How did clear trust terms save the day for the Henderson family?
The Henderson’s, unlike Old Man Tiber, came prepared. They specifically excluded investments in fossil fuels and companies with poor labor practices, outlining their values in detail within their trust. When their trust was activated, the trustee diligently adhered to these instructions. The portfolio was constructed with investments in renewable energy, sustainable agriculture, and companies recognized for their ethical treatment of employees. The trust, while not generating the absolute highest possible returns, provided a stable income for the beneficiaries while reflecting the Henderson’s deeply held beliefs. Their eldest daughter, a dedicated environmental activist, was thrilled, knowing her inheritance wasn’t contributing to the problems she was fighting against. It was a clear demonstration that a well-crafted trust can not only protect assets but also preserve values, offering peace of mind for both the grantor and the beneficiaries. That’s the kind of legacy we strive to create at my firm.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar 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 Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
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.
● Free consultation.
Services Offered:
- living trust
- revocable living trust
- estate planning attorney near me
- family trust
- wills and trusts
- wills
- estate planning
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “What documents are essential for a basic estate plan?” Or “What is ancillary probate and when does it happen?” or “Can a living trust help me qualify for Medicaid? and even: “How long does bankruptcy stay on my credit report?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.