Balancing Competing Interests
Most trusts serve more than one person. A surviving spouse may receive income during their lifetime while children receive the remaining assets later. Current beneficiaries may want distributions now; remainder beneficiaries want the trust to grow. The trustee sits in the middle, and this statute requires them to balance those competing interests fairly.
If a trust has two or more beneficiaries, the trustee shall act impartially in investing, managing and distributing the trust property, giving due regard to the beneficiaries' respective interests.
A.R.S. § 14-10803Impartiality does not mean treating every beneficiary identically. It means giving "due regard" to each person's interests as defined by the trust. If the trust prioritizes the surviving spouse's comfort, the trustee can weight distributions accordingly. The duty is to be fair within the framework the trust creator established.
Where Impartiality Becomes Practical
Investment decisions often test this duty. A portfolio heavy in growth stocks may benefit remainder beneficiaries at the expense of income beneficiaries. A portfolio heavy in bonds may do the opposite. The trustee needs to find an appropriate balance that serves both groups based on the trust's terms.
Distribution decisions raise similar questions. A trustee who consistently favors one beneficiary over another without support in the trust document is not meeting the impartiality standard. Clear trust language helps the trustee navigate these decisions and reduces the chance of conflict among family members.
