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Tucker Cheadle: Trust Expert Witness Discusses Trust Distributions

In a trust, related to trust distributions, taxable income refers to any income generated by the assets held in the trust that is subject to income tax. This can include things like interest from investments, rental income, and capital gains from the sale of trust assets.

Non-taxable principal, on the other hand, refers to the assets held in the trust that are not subject to income tax. These assets are typically not generating income and include things like cash, real estate, and securities.

It's important to note that the distinction between taxable income and non-taxable principal can vary depending on the type of trust and the tax laws in the jurisdiction where the trust is established. Some trusts may be structured in such a way to minimize tax liability by allocating income and gains to different classes of beneficiaries. For cases involving a trust expert witness, it is important to focus on an attorney with years of experience in trust distributions.

Cases in California outline the law on how a trust can distribute its taxable income and non-taxable principal amongst different beneficiaries:
  • A beneficiary may receive “a significant benefit in the form of tax saving,” but it should not be “exacted in the form of an unjust enrichment at the expense of the residuary beneficiaries.” 1

  • “A probate court has the equitable power to insure that one beneficiary does not receive a tax benefit at the expense of another.” 2

  • It is a violation of the duty of impartiality to allocate property to a beneficiary without taking into account the consequences of the properties’ taxable appreciation in value. 3

  • “[t]he consequence of the [Uniform Principal and Income Act] is that a trustee must ensure an equitable apportionment of enhancements in trust property value between income beneficiaries and principal beneficiaries.” 4
It's always best to consult with a tax professional or a lawyer who is familiar with trust law and the tax laws of your specific jurisdiction to determine how the trust will be taxed.

Tucker Cheadle is a licensed private trustee in California. He has acted as a fiduciary, trustee, executor, and administrator on more than 70 trusts and wills. Cheadle Law continues working with clients year over year because of the skill and expert handling of all trust matters.

With over 30 years of experience, Tucker Cheadle and his team of accountants and paralegals help protect client’s rights. Tucker Cheadle can be reached at 949-553-1066. Many attorneys have chosen Tucker Cheadle as the expert witness relating to trust distributions for their cases.

C. Tucker Cheadle Law has been designated as an Expert Witness 40+ times throughout California in these counties: Orange, Los Angeles, San Bernardino, Riverside, San Diego, San Francisco, Marin, Santa Clara, Santa Maria, Stanislas, Yolo, Redding, Napa, San Jose, Santa Barbara, Tucker, San Luis Obispo, and Amador.

In addition, C. Tucker Cheadle Law has been designnated as an Expert Witness in states outside of California including Michigan and Washington, and is available in all 50 states. Contact us today at 949.553.1066 to discuss Trust and Estate Planning Expert Witness needs.

  1. In re Bixby’s Estate, 55 Cal.2d 819 (1961)

  2. Estate of Dehgani-Fard 141 Cal. App. 4th 797 (2006)

  3. Penny v. Wilson, 123 Cal. App. 4th 596, 607 (2004)

  4. Reilly v. City and County of San Francisco, 142 Cal. App. 4th 480, 497 (2006)

A review of any materials on this web page, any preliminary comments or an introductory meeting does not constitute legal, income tax or accounting advice upon which reliance can be placed. The attorney client relationship can only be created by a written retainer agreement following a check of potential and actual conflicts of interest with other clients.
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Trust Expert Witness Discusses Trust Distributions

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