trusts-and-estates
Do volatile investments in estates cause potential problems for executors?
<p>I'm an executor for an estate (in the U.S.), but this is just (thank goodness) a hypothetical I've been curious about:  Suppose an executor finds, a few months into probate, that the estate includes a volatile investment, such as bitcoin, precious metal ingots, penny stock, etc.  Could the heirs be successful suing under these situations...</p>
<ol>
<li><p>The value of the investment dropped since the death, and the heirs argue that the executor should have discovered the investment sooner.</p>
</li>
<li><p>The executor sells the investment, but its value would have gone up if they had not sold it before the estate is disbursed.</p>
</li>
<li><p>The executor DOESN'T sell the investment until disbursement, and its value drops.</p>
</li>
</ol>
<p>Do courts give a lot of 'mercy' to the executor and toss suits like these?  And is there something the executor can do to protect themself?  Otherwise it seems like its a no-win situation for the executor.</p>

<p><a href="/questions/tagged/new-south-wales" class="post-tag" title="show questions tagged &#39;new-south-wales&#39;" rel="tag">new-south-wales</a></p>
<h2>No more or less than any other investment</h2>
<p>The governing act on trustees (including executors) is the <em><a href="http://www8.austlii.edu.au/cgi-bin/viewdb/au/legis/nsw/consol_act/ta1925122/" rel="nofollow noreferrer">Trustee Act</a></em> 1925. With respect to <a href="https://www.cbp.com.au/insights/insights/2013/june/trustees-must-take-care-when-investing-trust-funds" rel="nofollow noreferrer">investing</a>:</p>
<blockquote>
<p>The relevant legislation is section 14 of the Trustee Act 1925 (Act). This section provides that a trustee may, unless expressly forbidden by the trust deed, invest trust funds in any form of investment.</p>
<p>Section 14A of the Act provides that, in exercising the power of investment, a professional trustee must exercise the care, diligence and skill that a prudent person engaged in the profession would exercise in managing the affairs of other persons. If the trustee is not a professional trustee, he or she must exercise the care, diligence and skill that a prudent person would exercise in managing the affairs of other persons.</p>
</blockquote>
<p>In discharging their obligations:</p>
<blockquote>
<p>Trustees should consider needs of beneficiaries, risks and tax implications</p>
</blockquote>
<blockquote>
<p>Trustees should consider obtaining independent and impartial advice</p>
</blockquote>
<blockquote>
<p>Trustees can avoid problems by adhering to investment strategies and communicating carefully with investment managers</p>
</blockquote>
<blockquote>
<p>Trustees should be prudent, seek expert advice and keep careful records</p>
</blockquote>
<p>With respect to highly speculative investments like cryptocurrency, it may be appropriate to hold them if the will says they should be held, if they match the risk profile of all the beneficiaries and/or if they are a small part of a more diversified portfolio.An executor would be unwise to try and “time” the market but should rather construct and execute a coherent investment strategy, with expert and independent advice.</p>
