{"id":12074,"date":"2026-01-02T21:28:11","date_gmt":"2026-01-03T02:28:11","guid":{"rendered":"https:\/\/resources.evans-legal.com\/?p=12074"},"modified":"2026-01-02T21:38:12","modified_gmt":"2026-01-03T02:38:12","slug":"trustee-properly-transferred-principal-to-income","status":"publish","type":"post","link":"https:\/\/resources.evans-legal.com\/?p=12074","title":{"rendered":"Trustee Properly Transferred Principal to Income"},"content":{"rendered":"\n

Although the trust instrument restricted distributions of principal, the trustee nevertheless had the power under a provision of the Uniform Principal and Income Act (“UPIA”), 20 Pa.C.S. \u00a7 8104<\/a>, to allocate amounts of principal to income, and distribute that income to the beneficiary entitled to the income, in order to be fair and reasonable to the beneficiaries, and the allocations made by the trustee were not an abuse of discretion because the increases in the value of the principal were disproportionate to the trust’s production of income. The trust instrument did not forbid the adjustments made by the trust (and appeared to authorize them; see note below), and the UPIA applied to the trust even though it was created before the enactment of the UPIA because section 14 of the Act of May 15, 2002, No. 50, which enacted the UPIA, states that the act shall apply to trusts “existing on or after the effective date of this act.” In re: Hess Kline, Deceased<\/em>, ___ A.4th ___, 2025 PA Super 295<\/a> (12\/31\/2025), aff’g<\/em>, Kline Estate<\/a><\/em>, 2 Fid.Rep.4th 339 (Montgomery O.C. 2024).<\/p>\n\n\n\n

[DBE Note: This appears to be the first appellate court opinion in Pennsylvania affirming an adjustment to income and principal under \u00a7 8104, and it affirms that the statute means what most practitioners understood it to mean. However, the Superior Court concluded that the trust instrument (the decedent’s will) authorized the allocation of principal to income even without the UPIA, and I disagree with that conclusion. The sentence in question authorized the fiduciaries to claim items as either income tax or estate tax deductions, and “to make or not make adjustments or apportionments among the beneficiaries or as between principal and income.” I believe that the intent of the provision was to avoid the kind of mandatory<\/em> “equitable adjustment” that might otherwise be required under decisions such as Matter of Warms<\/em>, 140 N.Y.S.2d 169 (1955), and In Re Bell’s Estate<\/em>, 7 Fid.Rep. 1 (Pa. O.C., 1956), when principal expenses are claimed as income tax deductions (or vice versa), and that there was no intent to create a new power of adjustment in other circumstances. The court held that the trustee had the power of adjustment under \u00a7 8104 regardless, and the counsel for the appellant might not have explained the Warms<\/em> issue very well, so the court’s discussion of adjustments allowed by the will may hopefully be ignored by other courts in the future.]<\/p>\n","protected":false},"excerpt":{"rendered":"

Although the trust instrument restricted distributions of principal, the trustee nevertheless had the power under a provision of the Uniform Principal and Income Act (“UPIA”), 20 Pa.C.S. \u00a7 8104, to allocate amounts of principal to income, and distribute that income … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"pmpro_default_level":"","footnotes":""},"categories":[34],"tags":[840,839],"class_list":["post-12074","post","type-post","status-publish","format-standard","hentry","category-opinions","tag-pef-8104","tag-principal-and-income-act","pmpro-has-access"],"_links":{"self":[{"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=\/wp\/v2\/posts\/12074","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12074"}],"version-history":[{"count":5,"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=\/wp\/v2\/posts\/12074\/revisions"}],"predecessor-version":[{"id":12089,"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=\/wp\/v2\/posts\/12074\/revisions\/12089"}],"wp:attachment":[{"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12074"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12074"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/resources.evans-legal.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12074"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}