A partial solution to the trustee's dilemma in managing…

A partial solution to the trustee's dilemma in managing risk and reward within a trust that owns an active family enterprise often comes from having enlightened beneficiaries who see themselves as the stakeholder-owners of the enterprise. Under trust law, if the beneficiaries of the trust are all adults of sound mind, the beneficiaries can release the trustees from the normal limitations on risk governing the trust. This legal principle recognizes that because the trustees are ultimately accountable to the beneficiaries for their actions, the beneficiaries can determine in advance how they would prefer the trustees to act and release them from liability for that action if the trustees follow their requests.

— from The Flight Plan (Purpose/Wisdom/Risk) · Family: The Compact Among Generations by James E. Hughes Jr.

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