If a trustee determines that an allocation between principal and income required by § 35-6-409, § 35-6-410, § 35-6-411, § 35-6-412, or § 35-6-415 is insubstantial, the trustee may allocate the entire amount to principal unless one (1) of the circumstances described in § 35-6-104(c) applies to the allocation. This power may be exercised by a cotrustee in the circumstances described in § 35-6-104(d) and may be released for the reasons and in the manner described in § 35-6-104(e). An allocation is presumed to be insubstantial if:

(1) The amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than ten percent (10%); or
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Terms Used In Tennessee Code 35-6-408

  • 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.
  • Income: means money or property that a fiduciary receives as current return from a principal asset. 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
  • 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) The value of the asset producing the receipt for which the allocation would be made is less than ten percent (10%) of the total value of the trust’s assets at the beginning of the accounting period.
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