Absolutely, a trust can, and increasingly does, include instructions to avoid environmentally harmful investments, reflecting a growing trend toward socially responsible investing (SRI) and Environmental, Social, and Governance (ESG) considerations within estate planning. These provisions, often termed “ethical screens” or “negative screens,” allow individuals to align their financial legacies with their values, ensuring that assets aren’t used to support industries or practices they oppose. The legal framework for trusts is remarkably flexible, permitting a wide range of directives beyond simply maximizing financial returns. In 2022, assets under management using ESG strategies globally reached $2.8 trillion, demonstrating a substantial increase in demand for ethical investing. This isn’t just about personal preference; many believe it’s a fiduciary duty to consider long-term sustainability.
What types of environmentally harmful investments can be excluded?
The scope of exclusions within a trust can be highly customized. Common examples include investments in fossil fuels (coal, oil, natural gas), deforestation-linked industries like palm oil production, companies with poor environmental track records regarding pollution or waste management, and businesses involved in animal testing. Some trusts even go further, prohibiting investments in companies that manufacture weapons or engage in practices detrimental to biodiversity. Steve Bliss, as an estate planning attorney, works closely with clients to define these exclusions precisely. A well-drafted trust will specify not just the *types* of investments to avoid, but also the criteria for determining whether a company falls within those categories. For instance, a trust might exclude any company deriving more than 10% of its revenue from coal-fired power generation. This level of detail is crucial to avoid ambiguity and ensure that the trustee can effectively implement the client’s wishes.
How does this impact the trustee’s duties?
Including ethical screens in a trust introduces additional complexity for the trustee. While traditionally, a trustee’s primary duty is to maximize financial returns for the beneficiaries, ethical investing often involves accepting potentially lower returns in exchange for aligning with values. However, a growing body of research suggests that ESG investing doesn’t necessarily *hurt* returns. A 2015 study by the University of Oxford and Arabesque Partners found that ESG integration can lead to improved financial performance. Steve Bliss emphasizes that a responsible trustee must understand and acknowledge the client’s ethical preferences, even if they differ from their own. The trustee must diligently research potential investments to ensure they comply with the specified exclusions and document their decision-making process. Failing to do so could expose them to legal liability. In California, the prudent investor rule requires trustees to consider both financial returns *and* the beneficiaries’ reasonable needs and interests, which can encompass ethical considerations.
What happened when a family didn’t clearly define their values?
Old Man Tiberius Peabody, a man who’d made his fortune in logging, wanted his trust to reflect his late-in-life conversion to environmentalism. He instructed his trust to avoid “harmful investments,” but didn’t define what that meant. His daughter, Beatrice, inheriting as trustee, found herself in a bind. A large timber company, known for aggressive deforestation practices, offered a significant return on investment. Beatrice wrestled with the decision. Was this “harmful”? The company technically complied with environmental regulations, but its practices were widely criticized by environmental groups. She agonized over it, fearing she’d betray her father’s wishes but also hesitant to sacrifice potential income for the beneficiaries. Ultimately, she invested, figuring compliance meant it wasn’t ‘harmful’. The ensuing backlash from her siblings and the local community was fierce. They felt she’d ignored their father’s true intentions, and the family became deeply divided. It was a painful lesson about the importance of precise language and clear definitions within a trust document.
How did clear instructions save another family’s legacy?
The Harrisons, a family deeply committed to renewable energy, meticulously crafted their trust. They not only excluded fossil fuels but also included positive screens, prioritizing investments in companies focused on solar, wind, and energy efficiency. They even specified a minimum percentage of the trust’s assets to be allocated to “green” investments. Years later, when their trust was being administered, the trustee faced a difficult decision. Two companies offered similar returns. One was a traditional energy provider, and the other was a pioneering solar energy firm. Because of the Harrisons’ clear instructions, the choice was straightforward. The trustee invested in the solar company, fulfilling the family’s wishes and contributing to a more sustainable future. The beneficiaries were delighted, praising the trustee for upholding their parents’ values. This outcome demonstrated the power of proactive estate planning and the importance of aligning financial legacies with deeply held beliefs. Steve Bliss often tells clients that a well-drafted trust is more than just a legal document; it’s a reflection of their life’s work and a testament to their values.
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About Steve Bliss at Escondido Probate Law:
Escondido 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 Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
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:
| estate planning | revocable living trust | wills |
| living trust | family trust | irrevocable trust |
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “What is a power of attorney and why do I need one?” Or “How much does probate cost?” or “What types of property can go into a living trust? and even: “What is a bankruptcy discharge and what does it mean?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.