Abstract
The author looks into the issue of income distribution in a trust context. He highlights the recent trend away from distribution rules based on accounting income (interest and dividend), toward rules that provide for a set percentage of the trusts markets value to be paid out to income beneficiaries. The author discusses both the benefits and the dangers of these new unitrusts. He concludes that, on balance, unitrusts do not seem to be a good idea, both because now is the wrong time to consider them, and linking current distributions to current market values is unnecessary and can be unproductive. The author proposes an alternative solution, though departing from a strict interpretation of the standard accounting income rule, and avoiding the pitfalls of a total return distribution approach.
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