Uni-Trust Payment

By: Martin M. Shenkman, CPA, MBA, JD

A payment from a trust based on a percentage of the trust assets. For example, instead of paying out income from a trust the trust could be structured to pay say 4% of the value of the trust to a current beneficiary. This approach can enable a trustee to invest trust assets for total return and more readily treat current beneficiaries (analogous to an income beneficiary) and a remainder beneficiary (who receives trust assets when the current/income beneficiary interest ends) more fairly. If a trust does not provide for a uni-trust payment an election may be made if state law permits to convert a trust structured to pay income to a uni-trust approach. This approach to structuring a trust distribution standard comports with modern portfolio theory, and in appropriate circumstances can provide considerable advantage over the "older" approach of paying income to a current beneficiary.

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