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unless the trust document or state law states otherwise, indirect expenses of a trust are usually...

unless the trust document or state law states otherwise, indirect expenses of a trust are usually allocated to:a) trust income:b) trust principal:c) trust income and trust principal proportionately:d) tax exempt income

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Answer #1

c) Trust income and trust principal proportionately

Unless the trust document or state law states otherwise, indirect expenses of a trust are usually allocated to trust income and principle proportionately. It will make a decline in the principle and income. When a trust earns income or pays expenses, the income or expenses are allocated either to principal or to income. Genarally trust document specifies which income or expenses are allocated to the principal or to income. If the trust document does not specify the allocation, then state law applies. Otherwise these indirect expenses will allocated to the principle and income in a proportionate manner.

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