TENTH CONCEPT: INCOME & PRINCIPAL (UNIFORM PRINCIPAL AND INCOME ACT)

Question 1

The life tenant gets what income?

Answer 1

1. cash dividends
2. interest income
3. net business income

Question 2

The life tenant’s interest pays for what expenses?

Answer 2

[1] Interest on loan indebtedness
[2] Taxes
[3] Minor repairs (e.g. paint job)

Question 3

Remainderman gets what income?

Answer 3

1. stock dividends
2. stock splits
3. net proceeds on the sale of a trust asset

Question 4

Remainderman’s interest pays for what expenses?

Answer 4

[1] Principal part of loan indebtedness

[2] Major repairs or improvements (new wing on a building)

Question 5

When can the trustee disregard allocation of

income rules to life tenant and remainderman?

Answer 5

if a different allocation is necessary to administer the trust fairly.