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Consequently, the trustee must make sure that the trust property produces a reasonable income while being preserved for the remaindermen. According to the duty of impartiality, a trustee has a duty to deal with both the income beneficiary and the remainderman impartially.
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There is tension between the interests of beneficiaries entitled to income and those who may later be entitled to the principal.
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In addition, the trustee has to act to ensure that there will be enough money left in the trust to create the second trust for O’s grandchildren. The trustee has to make sure that the trust produces enough income to meet O’s daughter’s needs. After the death of my daughter, the remaining assets are to be held in trust for my then living grandchildren.” O’s daughter has a life estate in the first trust O’s grandchildren have a contingent remainder in the second trust. For instance, O could execute a will containing the following language: “I leave the residuary of my estate in trust for the benefit of my daughter for life. Typically, the future beneficiaries are paid the principal remaining in the trust after the present beneficiary dies. The present beneficiary relies on the income from the trust. Most trustees are accountable to two types of beneficiaries-present and future.
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