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Petitioner as Trustee
The settlor also named his son, petitioner, trustee of the
trust. Petitioner was the initial trustee of the trust and
served until 1985. Petitioner served as trustee again from 1986
through at least the date the petition was filed. An unrelated
person was trustee in the brief interim.
The trustee has general authority to manage and distribute
the trust’s assets and income. The trust agreement obligates the
trustee to manage the corpus in a manner that would satisfy the
purpose of allowing a distribution of the corpus to the settlor’s
grandchildren after petitioner dies. All the powers the trustee
has are subject to fiduciary duty limitations and subject to the
limitations of the trust agreement.
The trustee is restricted in dealing with the corpus and
income by the prudent investor rule, is not allowed to engage in
speculation, and is required to seek long-term growth and
appreciation of the trust property, considering income production
as well as the safety of the corpus. The trust agreement
restricts each beneficiary from disposing of his or her interest
in the trust. Arkansas law governs the interpretation of the
trust agreement.
Undistributed Net Income and Deemed Distributions
Petitioner chose not to make or accept the mandated annual
distributions of net income despite the requirement in the trust
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Last modified: May 25, 2011