8. Principal & Income (UPAIA)

Question 1

What are the differences between Principal and Income?

Answer 1

Principal => Remaindermen

• Dividends (stock)
• Disposition resulted assets
• Newly acquired assets
• Life insurance proceeds (Trustee named as Beneficiary)
• 50% (accounting, judicial proceedings expenses)
• Trust debt payments
• Estate taxes
• Pension plan (balance)

Income => Life beneficiaries

• Dividends (cash)
• Rents
• Leases
• Life insurance proceeds (insured Trustee vs losses)
• 50% (accounting, judicial proceedings expenses)
• Ordinary expenses
• Pension plan (receipts)