A trustee must consider the differing interests of current and future beneficiaries, particularly in investment allocation between income production and growth. The prudent investor framework and principal and income acts address the tension.
Trust terms may direct favoring one class.
Alternative Names:
Impartiality|Trustee Impartiality
Why it Matters?
Investment allocation creates inherent tension between income beneficiaries wanting yield and remaindermen wanting growth, and total return investing with a unitrust or power to adjust resolves it by decoupling distributions from accounting income. Trustees using traditional income allocation in a low-yield environment face impartiality claims from income beneficiaries. Documenting the balancing analysis protects against both sides.
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Related terms
Frequently asked questions
What resolves the income and growth tension?
What protects the trustee?
