Limited Quick Reference Glossary

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 169-171

169

Distributable net income: This is an IRS rule that is used in order to

determine the amount of income that a trust beneciary must report.

A trust accountant should know how to calculate the amount that

the trust beneciary must report. The trust accountant must become

familiar with the provisions of the trust document and the UPAIA

rules in the particular jurisdiction.

Living trust scams: These involve sales pitches of canned agreements to

senior citizens by salespeople who are interested in selling products

to them. I have run into this situation recently, and it was a nightmare

that involved many product sales and a canned book of trusts.

Power to adjust: Many trust accounting laws allow the trustee to

transfer principal to income or vice versa to make sure that the

trust beneciary who is an income beneciary receives a reasonable

amount of income. The reason for the rule is that if the trustee

invests substantially in equities, then the trust income beneciary may

receive only a negligible amount of income. In that case, the trustee

can transfer a reasonable amount of principal to income during the

accounting period to enhance the amount that the trustee income

beneciary receives with respect to a given year.

Remedies for breach of trust: If a trustee violates his or her duty as

a trustee, then the trustee can be removed, lose his or her trustee

compensation, and/or be held personally liable for any damages and

may have to pay for his or her legal defense fees personally.

Statute of limitations: The statute of limitations means the time in which

a proceeding may be commenced against a trustee. It is based on the

Limited Quick

Reference Glossary