The creation and administration of trusts drafted in the United States are
subject to the guidelines and limitations of legislation that addresses trusts
and trust laws. English common law was the original governing legal precedent
in regard to trusts and trust laws dating back to the Crusades of the 12th and
13th Centuries. Since then, considerable changes and safeguards have been
implemented to ensure the protection and authenticity of trusts that are
drafted. In the United States, many states create their own trust laws based on
the outlines and legislation provided by the federal government.
Such trust laws includes the Uniform Prudent Investor Act, the Uniform
Principal and Income Act, the Uniform Custodial Trust Act, the Uniform Probate
Code, and the Uniform Trust Code.
The Uniform Prudent Investor Act (UPIA), created in 1992, permits trustees
to manage the assets and investments of a trust through modern portfolio
management methods. Trustees are to manage the trust based on financial need,
tax status, investment potential, and potential risk.
The Principal and Income Act (UPAIA), created in 1997, presents outlines
and tasks for trustees to adhere to when administering the estate of a trust. Trusts
must provide evidence of receipts and payments in relation to the trust to the
beneficiaries. This act is intended to carry out the wishes and terms of the
grantor in the text of the trust instrument.
The Uniform Custodial Trust Act (UCTA), created in 1987, makes provisions
for an estate to be managed in a trust when the owner of the property has been
incapacitated. Incapacitation may be caused by a physical disability, mental
health issue, injury or death. Custodial trusts are simple trusts that declare
who is to manage the estate and give them the power to distribute the estate to
noted beneficiaries if the grantor does not recover from incapacitation.
The Uniform Probate Code (UPC), created from 1694 through 1969, displays
guidelines and methods to be used for courts to preside over Probate
proceedings. The UPC has eight that constitute the provisions made regarding
how Last Will and Testaments and trusts are to be decided upon in Probate
court.
The Uniform Trust Code (UTC), created in 2000, presents guidelines and
regulations on the creation of trusts and how to determine if a trust is valid
in the eyes of the court. This code makes the creation of trust laws easier to
be drafted and implemented.
In addition to these codes and acts, federal tax laws also apply to trusts
and their management, which may affect the value of the trust when administered
to its beneficiaries.
Each of these acts and codes are not imposed at a federal level. States may choose
to adopt these codes and then alter them to coincide with other laws and
regulations within that state. States also reserve the right to not adopt these
codes at all. Each of these codes and acts were drafted by the National
Conference of Commissioners on Uniform State Laws (NCCUSL) to create uniformity
between fields of law and their application to states and their denizens.
