3) Accounting

Question 1

accounting is only an issue if

Answer 1

multiple beneficiaries

Question 2

accounting: general rule

Answer 2

trustee must treat all beneficiaries fairly (even if eg take at dif times, or income beneficiaries vs remaindermen)

Question 3

dividends: how divided

Answer 3

depends on if cash or stock

Question 4

cash dividends: how divided

Answer 4

treated as income, go to income beneficiary

Question 5

stock dividends: how divided

Answer 5

treated as principal, go to the remaindermen

Question 6

problematic kinds of assets

Answer 6

1) nonproductive

2) wasting

Question 7

nonproductive asset: def

Answer 7

benefits only remaindermen, not the income beneficiary

Question 8

wasting asset: def

Answer 8

benefits only income beneficiary, not remaindermen, bc slowly depleted over time

Question 9

trustee’s duty for both problematic assets

Answer 9

sell the property and invest in an income producing property that can benefit both

UNLESS trust agreement says otherwise (then might fix other ways like setting aside income from wasting asset for remaindermen)

Question 10

how expenses are divided

Answer 10

1) ordinary expenses (inc taxes) charged to income
2) extraordinary expenses (inc taxes) charged to principal
(default rule)