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Lessons From the Revised Uniform Principal and Income Act
Changes to the rules relating to the determination of income in trusts and estates have given CPAs the opportunity to provide broad financial planning services to trustees.
Trustees are well advised to have an investment statement for all significant assets. These plans should reflect a thought-out approach to investment objects and cash-flow planning given the trust's objectives.
As with business entities, the complexities of advising will depend on the assets held and the trust's objectives. A trust with a modest portfolio intended to fund education could have a relatively simple plan, while one planning for extensive real estate holdings that are intended to provide multiple generations of beneficiaries with income may have a much more complicated plan.
Two Years Later
The accounting rules for trusts and estates were substantially changed as of Jan. 1, 2000. A practitioner working with California trusts and estates should have a copy of the California law and the California Law Revision Commission's report on this subject. The report may be downloaded at http://161.58.165.226/pub/Printed_ Reports/; select sPRT-UPAIA-2000.pdf. While the new rules apply to estates and trusts, this article focuses on trusts. Under the rules, a trustee may create reserves for future expenses for any business the trustee conducts. A...