Unless the governing instrument makes another provision, the Act applies to regulate the allocation of income and expense between the income and principal interests of a trust or estate. Accordingly, draftsmen who do not expressly exempt the fiduciary from the provisions of the Act or simply give the fiduciary standard North Carolina powers by incorporating by reference the provisions of N.C. Gen. Stat. § 32-27 are directing by default that the provisions of the Act apply to govern the allocation made by the fiduciary. This article will explore some of the consequences of each choice and will provide a framework for a decision whether to have selected sections of the Act apply or to draft specific instructions or to allow for fiduciary discretion.
James W. Narron, Estate Planning Considerations for the North Carolina Principal and Income Act of 1973, 8 Campbell L. Rev. 173 (1986).