IRS Okays Turning Total Return on Its HeadIRS Okays Turning Total Return on Its Head
Many estate-planning attorneys have used total return trusts to cope with falling yields in an effort to balance the income beneficiary's need for income against the remaindermen's need for growth. In a low interest rate environment, trustees have had to confront the reality of yielding 3 percent or less for a trust's income beneficiary when balancing trust portfolios to account for proper growth
April 1, 2007
Craig R. Hersch, partner, Sheppard, Brett, Stewart, Hersch, Kinsey & Hill, P.A., Fort Myers, Fla.
Many estate-planning attorneys have used total return trusts to cope with falling yields in an effort to balance the income beneficiary's need for income against the remaindermen's need for growth. In a low interest rate environment, trustees have had to confront the reality of yielding 3 percent or less for a trust's income beneficiary when balancing trust portfolios to account for proper growth to benefit the remaindermen beneficiaries.
In response to these concerns, many states passed total return, or unitrust statutes. These laws generally allow trustees to modify income trusts to distribute between 3 percent and 5 percent of the value of ...
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