A trustee shall allocate to principal:

(1) To the extent not allocated to income under this chapter, assets received from a transferor during the transferor’s lifetime, a decedent‘s estate, a trust with a terminating income interest, or a payer under a contract naming the trust or its trustee as beneficiary;
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Terms Used In Tennessee Code 35-6-404

  • Accounting period: means a calendar year unless another twelve-month period is selected by a fiduciary. See Tennessee Code 35-6-102
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • Beneficiary: includes , in the case of a decedent's estate, an heir, legatee, and devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary. See Tennessee Code 35-6-102
  • Contract: A legal written agreement that becomes binding when signed.
  • Decedent: A deceased person.
  • Income: means money or property that a fiduciary receives as current return from a principal asset. See Tennessee Code 35-6-102
  • Income interest: means the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee's discretion. See Tennessee Code 35-6-102
  • Mandatory income interest: means the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute. See Tennessee Code 35-6-102
  • 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 chapter to or from income during the period. See Tennessee Code 35-6-102
  • Principal: means property held in trust for distribution to a remainder beneficiary when the trust terminates. See Tennessee Code 35-6-102
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • 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 Tennessee Code 35-6-102
(2) Money or other property received from the sale, exchange, liquidation, or change in form of a principal asset, including realized profit, subject to this chapter;
(3) Amounts recovered from third parties to reimburse the trust because of disbursements described in § 35-6-502(a)(7) or for other reasons to the extent not based on the loss of income;
(4) Proceeds of property taken by eminent domain, but a separate award made for the loss of income with respect to an accounting period during which a current income beneficiary had a mandatory income interest is income;
(5) Net income received in an accounting period during which there is no beneficiary to whom a trustee may or must distribute income; and
(6) Other receipts as provided in Part 4C, §§ 35-6-408 – 35-6-415.
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