Complimentary RPTE member only, non-CLE Teleconference recorded on October 10, 2017
How to allocate trust receipts between principal and income would seem to be a simply enough decision: dividends, interest, and rents are income, proceeds of sale of trust property are principal. But sometimes it's not so simple. For decades, the Uniform Principal and Income Act has set out default rules for allocating receipts and expenses between income and principal. The 1997 revision of the Act, however, moved into new territory with "the power to adjust," a new tool for trustees to use in the attempt to treat the interests of all beneficiaries in an impartial manner.
Today, the Act is again being revised, and has a new name, the Uniform Fiduciary Income and Principal Act. The drafting process is halfway done and the time is ripe for a discussion of what is new in the latest draft, what problems are still under discussion and, more broadly, how some of the new features of UFIPA fit into the changing law of trust modification.