What kind of investments are allowed in a trust?
In Florida, trusts are often used to hold investments for the beneficiaries of an estate. The investments allowed in the trust will depend on the type of trust and the laws of the particular state. In Florida, investments allowed in trusts are typically limited by the Florida Trust Code, which states that investments must be suitable for the purpose of the trust, be authorized by the trust instrument, or be made in a manner consistent with the terms and objectives of the trust. Common investments allowed in a trust in Florida include stocks, bonds, mutual funds, certificates of deposit, annuities, real estate, and tangible personal property. These investments can either be held directly by the trust or by an investment advisor hired by the trust. depending on the type of trust. When investing the trust’s funds, trustees must abide by the “prudent investor rule” which requires trustees to balance the risk and return of the investments and maintain a diversified portfolio that is appropriate for the trust’s beneficiaries. Trustees must also consider the age of the beneficiaries, liquidity needs, taxes, and other relevant factors before making any investments. Ultimately, the investments chosen for a trust must be reasonable and prudent. Trustees should always seek professional advice and counsel if they are unsure what investments are suitable for a particular trust.
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