State taxes
PENNSYLVANIA ADOPTS THE PRUDENT INVESTOR RULEFollowing a national trend, Pennsylvania recently adopted the Prudent Investor Rule. state taxes Taxes. The Rule applies to trustees and guardians, but not executors, custodians under the Uniform Transfers to Minors Act or agents under a power of attorney. It gives greater discretion than they previously had in choosing appropriate investments for funds they control. The rule reads, "A fiduciary shall invest and manage property held in a trust as a prudent investor would, by considering the purposes, terms and other circumstances of the trust, and by pursuing an overall investment strategy reasonably suited to the trust. state taxes Free online tax preparation. " The degree of care which a trustee or guardian must now exercise is "reasonable care, skill and caution in making and implementing investment and management decisions. " Additionally, a fiduciary with special investment skills must exercise those skills to meet the prudent investor standard. The fiduciary may invest in any type of investment, so long as he or she has met the standard of care. state taxes 2002 tax calculator. This changes the landscape of fiduciary law significantly in the past, fiduciaries were often afraid to use non-traditional investment vehicles for fear of breaching their fiduciary duty. Now they must do so cautiously, but may use such vehicles if appropriate to the particular trust. The new Rule also permits an individual Trustee to hire investment managers and to delegate day-to-day control of a portfolio to the "investment agent. " A Trustee making this delegation must exercise prudence in selecting the investment agent, must establish the scope of authority granted the investment agent and must periodically review the investment agent''s performance. Similarly, one Trustee may delegate certain investment and management functions to a co-Trustee for example, when an individual co-Trustee gives the day-to-day management of a portfolio to a corporate co-Trustee. According to the rule, the factors a fiduciary should consider before deciding how to invest funds include the size of the trust; the nature and estimated duration of the fiduciary relationship; the liquidity and distribution requirements; the expected tax consequences; overall investment strategy; an asset''s special relationship or special value; the needs of the beneficiaries for present and future distributions; and the income and resources of the beneficiaries of the related trusts. In addition, the fiduciary must diversify investments, unless there is a compelling reason not to or the governing instrument permits non-diversification. The Prudent Investor Rule is a default rule which applies unless the governing instrument indicates otherwise. ASSET PROTECTION TRUSTS(FTC v. Affordable Media, CCA-9, No. 98-16378)Since 1993, Asset Protection Trusts have been a high-profile planning tool. The basic asset protection plan, the spendthrift trust, has been around for generations.
State taxes
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