Prudent investor rule gives trustees new guidelines

Article Abstract:

The American Law Institute's revised Restatement Third of the Law of Trusts recreates the prudent investor rule with consideration to modern portfolio theory and to re-establish flexibility currently limited by court rulings. Modern portfolio theory emphasizes diversification and awareness of the effects of inflation which are not reflected in investment restrictions under the original rule. Fiduciary responsibilities remain unchanged in that they require careful analysis before investment, but the rules underlying the investment have been modernized.

American Law Institute

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It's not your father's pension fund: ERISA's prudent investor in the international market

Article Abstract:

The potentially lucrative overseas investment market should not be invested in by ERISA pension administrators unless the factor of political risk is made a part of the prudent investor standard. The US Dept of Labor has contributed to confusion in the pension investment regulatory scheme with its use of portfolio theory which does not take into account international risks such as political unrest. Reform should reflect ERISA policy and international investment community practices.

Pension funds

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Valuation discounts for private debt in estate administration

Article Abstract:

Fiduciaries may utilize valuation discounts for private debt such as promissory notes or installment obligations may exist even those discounts arising from debt that is a good risk. Such funds can finance testamentary gifts on a leveraged basis as well. Fiduciaries must fully understand the timing issues and tax implications regarding these opportunities.

Methods, Economic aspects, Estate planning, Valuation, Estate tax, Estate taxes, Promissory notes

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