What is a significant limitation of pooled income funds?

A significant limitation of pooled income funds is that they do not permit sprinkling provisions. This means that the income generated from the fund cannot be allocated or "sprinkled" among various beneficiaries at the discretion of the trustee. Instead, the income is typically distributed to the income beneficiaries based on their proportional share in the fund. This can limit flexibility in managing the distribution of income, especially in a situation where adjustments may be necessary to meet the varying needs of different beneficiaries over time. In contrast, other types of trusts may allow for more discretion in the allocation of income and principal, thereby providing a broader range of options for estate planning.