List of factors to consider economic conditions and needs of trust and beneficiaries – No restrictions on particular investments Duty to diversify, unless there are special circumstances Failing to diversity presents an unnecessary risk to the Duty to minimize costs Permission to delegate investment and management functions Consulting a range of different advisors may help you insulate yourself from accusations that you did not act as a prudent investor. (5) DUTY OF IMPARTIALITY Trusts generally have more than one beneficiary multiple beneficiaries – Often times these interests differ over time both current and future beneficiaries – Keep the interests of all beneficiaries in mind look to settlor’s intent – Settlor’s intent is absolutely key Settlor’s intent is supposed to be established clearly by the of the trust Settlor’s may very well intend for the fiduciary to favor one or more of the beneficiaries Allocation of income and principal Modern uniform laws allow a trustee to adjust between income and principal power to adjust (which is – limited by the duty of impartiality) Income: interest; dividends; rent Principal: capital gains; any property contribution to the trust RIGHTS OF BENEFICIARIES AND CREDITORS IN TRUST PROPERTY; MODIFICATION AND TERMINATION OF TRUSTS INTRODUCTION [56] Recurring tensions flashpoints – Rights of the beneficiaries v. the rights of the settlor Rights of the present interests beneficiaries v. the rights of the future interests beneficiaries We saw this in the last section as well The trustee’s discretion v. the trust language The claims of creditors v. the settlor’s intent to protect the beneficiaries Overarching flashpoint the need for flexibility in administering trusts, established by the language of a – trust instrument DISTRIBUTION PROVISIONS [56-66] RIGHTS OF BENEFICIARIES Trust Distributions What is the standard? Guiding principle will be the settlor’s intent Language of and all other evidence of intent at time of execution Distinction between mandatory and discretionary distributions Mandatory no discretion Discretionary some discretion; guidance provided An important distinction is that between and income corpus/principal Different Discretionary Standards
List of factors to consider – economic conditions and needs of trust and beneficiaries No restrictions on particular investments Duty to diversify, unless there are special circumstances Failing to diversity presents an unnecessary risk to the Duty to minimize costs Permission to delegate investment and management functions Consulting a range of different advisors may help you insulate yourself from accusations that you did not act as a prudent investor. (5) DUTY OF IMPARTIALITY Trusts generally have more than one beneficiary – multiple beneficiaries Often times these interests differ over time – both current and future beneficiaries Keep the interests of all beneficiaries in mind – look to settlor’s intent Settlor’s intent is absolutely key Settlor’s intent is supposed to be established clearly by the of the trust Settlor’s may very well intend for the fiduciary to favor one or more of the beneficiaries Allocation of income and principal Modern uniform laws allow a trustee to adjust between income and principal – power to adjust (which is limited by the duty of impartiality) Income: interest; dividends; rent Principal: capital gains; any property contribution to the trust RIGHTS OF BENEFICIARIES AND CREDITORS IN TRUST PROPERTY; MODIFICATION AND TERMINATION OF TRUSTS INTRODUCTION [56] Recurring tensions – flashpoints Rights of the beneficiaries v. the rights of the settlor Rights of the present interests beneficiaries v. the rights of the future interests beneficiaries We saw this in the last section as well The trustee’s discretion v. the trust language The claims of creditors v. the settlor’s intent to protect the beneficiaries Overarching flashpoint – the need for flexibility in administering trusts, established by the language of a trust instrument DISTRIBUTION PROVISIONS [56-66] RIGHTS OF BENEFICIARIES Trust Distributions What is the standard? Guiding principle will be the settlor’s intent Language of and all other evidence of intent at time of execution Distinction between mandatory and discretionary distributions Mandatory no discretion Discretionary some discretion; guidance provided An important distinction is that between income and corpus/principal Different Discretionary Standards
Trusts%20&%20Estates%20-%20Cahn%20-%202012.docx