3) Accounting Flashcards

You may prefer our related Brainscape-certified flashcards:
1
Q

accounting is only an issue if

A

multiple beneficiaries

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2
Q

accounting: general rule

A

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

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3
Q

dividends: how divided

A

depends on if cash or stock

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4
Q

cash dividends: how divided

A

treated as income, go to income beneficiary

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5
Q

stock dividends: how divided

A

treated as principal, go to the remaindermen

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6
Q

problematic kinds of assets

A

1) nonproductive

2) wasting

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7
Q

nonproductive asset: def

A

benefits only remaindermen, not the income beneficiary

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8
Q

wasting asset: def

A

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

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9
Q

trustee’s duty for both problematic assets

A

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)

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10
Q

how expenses are divided

A

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

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