American home mortgage liquidating trust

24-Oct-2017 23:22

A copy of the Act and commentary are provided in Appendix C Uniform Principal and Income Act of 1997.

Nearly all states have adopted the Act in some form; however, examiners are reminded that states may modify "uniform" Acts during the legislative process.

The trust function must have adequate facilities and equipment, as well as a sufficient number of knowledgeable, trained and experienced staff, to accomplish its tasks. This principle does not apply to trust accounting, since the fiduciary does not account for its own assets, but for the property of others.

Documentation substantiating appointments and actions taken throughout the life of an account must be obtained, maintained and preserved. As such, the fundamental principle behind trust accounting is expressed as follows: In this equation, assets such as securities, deposits, or real property are liabilities for which the department is accountable, or liable, to others.

For those circumstances where principal and income are not defined, default allocations have been established under the Uniform Principal and Income Act, with most states adopting the 1931 and the 1962 Revised Uniform Principal and Income Act.

The Act was again revised in 1997 to incorporate and be consistent with the concept of Prudent Investor Act (modern portfolio theory and total return) and allow for investment products not previously developed.

A trust occurs when the ownership of property is separated as to title and equity.

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Trusts, in some form, are permissible in all states.In personal fiduciary accounts, it is common for one set of beneficiaries to be entitled to the income ("income beneficiaries"), while a second set of beneficiaries is entitled to the principal ("remaindermen").These classes of beneficiaries often have different, sometimes opposing, needs and interests.While serving both classes of beneficiaries can often prove difficult, the trustee must balance objectives and investments, so that one class of beneficiary is not favored over the other.

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While account agreements may outline permissible investment products, the documents may not indicate treatment for allocations between principal and income.Beneficiaries are divided into two classes: those holding a current interest in the property of a trust, and those holding a remainder (or future) interest.