🥺
Trusts • Principal and Income Allocation
TRUSTS#045
Legal Definition
The following are allocated to a principal beneficiary: stock dividends; capital gains; distribution of liquidation of an entity; insurance proceeds; 90% of patents, copyrights, and oil and gas royalties; and net proceeds on the sale of a trust asset.
Plain English Explanation
A trust does not exist without property inside of it, and all property fits into one of two categories: principal or income. In some trusts, its creator may have simply combined the beneficiaries so that they benefit from both principal and income property. However, it is common for trusts to have some people identified as principal beneficiaries and different people identified as income beneficiaries.
The list in the Answer section identifies which types of property benefit principal beneficiaries.
The list in the Answer section identifies which types of property benefit principal beneficiaries.
