In my January 2014 “Note From the Editor,” I mentioned that my two children are graduating this year. Recently, my husband and I received even more exciting news: Starting in September, for the first time ever, both children will be gainfully employed. They’re excited about being (more or less) financially independent. But, they’re aware that earning money comes with responsibilities and tough decisions about how to manage that money to meet their expenses, while also enjoying life in New York City. For example, they’ll need to decide if they want to spend more on rent to live in a “hot” neighborhood or live in a less trendy area, so they can have more left over for other expenses and the occasional restaurant meal. How much money, if any, do they want to invest or save for the future?
My children’s financial decisions aren’t nearly as complicated as those of trustees managing assets in a trust. Trustees need to balance the interests of the income beneficiaries with those of the remaindermen. And, they must allocate sufficient assets to the income beneficiaries to meet their needs, while not sacrificing the asset growth that investing in equities could provide for remainder beneficiaries. In “Trustee’s Choice,” p. 41, Douglas Moore and Kirt D. DeHaan explain how trustees can use the Uniform Principal and Income Act and the Uniform Prudent Investor Act to promote an investment strategy of total return to grow trust assets, sustain a trust’s purchasing power and reduce the likelihood of depleting trust assets. In “A Trustee’s Guide to the Uniform Principal and Income Act,” p. 49, Gail E. Cohen and Erin Gilmore Smith update us on the recent case law involving the use of the power to adjust and unitrust election. In making decisions regarding a trust, trustees are often guided by what the settlor of the trust intended. They can get some help on this from “Understanding Settlors’ Intentions,”
p. 53, by Pamela L. Lucina and Anne F. Cutler, an article that discusses the creation and use of letters of wishes.