Michigan Laws 555.808 – Insubstantial allocation
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If a trustee determines that an allocation between principal and income required by section 409, 410, 411, 412, or 415 is insubstantial, the trustee may allocate the entire amount to principal unless 1 or more of the circumstances described in section 104(4) apply to the allocation. This power may be exercised by a cofiduciary in the circumstances described in section 104(5) and may be released for the reasons and in the manner described in section 104(6). An allocation is presumed to be insubstantial if 1 or more of the following apply:
(a) The amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than 10%.
Terms Used In Michigan Laws 555.808
- Accounting period: means a calendar year unless another 12-month period is selected by a fiduciary. See Michigan Laws 555.502
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Income: means money or property that a fiduciary receives as current return from a principal asset. See Michigan Laws 555.502
- Net income: means the total receipts allocated to income during an accounting period minus the disbursements made from income during the period, plus or minus transfers under this act to or from income during the period. See Michigan Laws 555.502
- Principal: means property held in trust for distribution to a remainder beneficiary when the trust terminates. See Michigan Laws 555.502
- Trustee: A person or institution holding and administering property in trust.
- Trustee: includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court. See Michigan Laws 555.502
(b) The value of the asset producing the receipt for which the allocation would be made is less than 10% of the total value of the trust’s assets at the beginning of the accounting period.