The benefits which the income beneficiary and remainderman ultimately derive from a trust depend primarily, notwithstanding the trustee's expertise, upon the investment powers which the trustee has been given by the settlor. In selecting these investment powers to be conferred by the trust instrument, the settlor and his lawyer must consider two familiar problems. The first problem is to determine the type of investment power to give the trustee which will be most beneficial to both the income beneficiary and remainderman, not only for today, but for the duration of the trust. The second problem is to draft the trust investment provision to grant the trustee clearly and unambiguously the investment powers intended by the settlor.
II. Types of Investment Powers … A. The Legal List … (1) The Legal List Tends to Freeze the Assets of the Trust Estate in Their Original Investments … (2) The Legal List Imposes Diversification According to Formula … (3) The Legal List Fails to Protect the Purchasing Power of the Trust Estate … (4) Summary—Legal List … B. Specific Authorization in the Trust Instrument to Invest in Certain Securities or Types of Securities … C. Grant or Full Investment Powers
III. Drafting the Investment Clause … A. The Legal List … B. Special Investment Powers … C. Full Powers
Thomas H. DeLay,
The Problem of Selecting and Drafting an Investment Clause for a Trust,
44 Neb. L. Rev. 109
Available at: https://digitalcommons.unl.edu/nlr/vol44/iss1/8