Does T's investment strategy reveal a breach of the trustee's duty of impartiality between X and Y?

• A. Yes; the strategy shows clear bias toward X.
• B. The strategy could be a breach depending on distributions.
• C. No; as long as T makes appropriate adjustments between principal and income to treat X and Y impartially.
• D. Yes; any heavy investment in one sector constitutes breach.

Answer: (C)

Impartiality means the trustee treats X and Y fairly, not giving any one beneficiary an unfair edge, and it includes balancing current interests with future interests through both investment decisions and how distributions are handled. The investment approach itself can be compatible with impartiality as long as there is a mechanism to level the playing field between X and Y.

If T can and does make appropriate adjustments between principal and income to ensure that neither beneficiary gains at the expense of the other, then the strategy can be consistent with the duty. For example, even if the trust yields more income to X in the short term, T can adjust future principal distributions or timing so that Y’s future interests are not disadvantaged, maintaining overall fairness between them.

This is why a blanket claim of bias or a blanket rule that any heavy tilt toward one sector is a breach is too strong. A bias would be present only if the investment choices consistently favor one beneficiary without any compensating adjustments. The notion that it could be a breach depending on distributions is incomplete without recognizing the role of those adjustments to preserve impartiality. When those adjustments are properly applied, there is no breach.