LIFE TENANT AND REMAINDERMAN-INCOME FROM CORPORATE SHARES IN TRUST-EXTRAORDINARY CASH OR STOCK DIVIDENDS

Authors

Abstract

A testator devises a block of corporate shares in trust,--the income to go to a life tenant for life, remainder to another as remainderman. So long as dividends are paid regularly, and in cash, distribution is a simple matter for the trustee. Dividends declared after the testator's death and before the death of the life tenant, are income and go to the life tenant; the rule operates regardless of when the profits which justify the declared dividends were earned. A real problem arises, however, when the corporation allows a surplus to accumulate for some time and then declares an extraordinary dividend in either cash or shares. Of course, here, as always the intent of the testator governs, and a testator may direct that such dividends, whether cash or shares, go to the life tenant or pass into the corpus of the estate. But since testators rarely make explicit provision for such a contingency, the onerous question of distribution is saddled on the courts which "differ widely in laying down rules on the subject."

Recommended Citation

LIFE TENANT AND REMAINDERMAN-INCOME FROM CORPORATE SHARES IN TRUST-EXTRAORDINARY CASH OR STOCK DIVIDENDS, 26 Mich. L. Rev. 555 (1928).
Available at: https://repository.law.umich.edu/mlr/vol26/iss5/7