It is often said that fiduciary accounting is governed by the Uniform Principal and Income Act (UPIA). This can be an overly board statement, but UPIA does provide guidance one of the most important areas of fiduciary accounting. The distribution of income between beneficiaries.
The UPIA specifies detailed reporting guidelines for trusts, estates and conservatorships. These entities can have two classes of owner; income beneficiaries and principle beneficiaries. The trust document or will specifies how income is to be distributed. Trustees must exercise caution that fiduciary accounting does not enrich an unintended beneficiary.
Tax laws associated with trusts have become more complicated over the past 30 years. The interrelation of fiduciary taxation, estate taxation and fiduciary accounting have become more intricate. UPIA seeks to provide guidance in fiduciary accounting. It specified how receipts and disbursements are to be categorized and which equity interest holder’s account is to be affected. The law ensures that the intention of the trust’s creator are carried out.
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Proper implementation of the estate plan requires documenting the transfer of assets to individuals or trusts.
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