TRUSTS - RIGHTS OF SUCCESSIVE BENEFICIARIES TO CORPORATE STOCK DIVIDENDS - ORDINARY AND EXTRAORDINARY DIVIDENDS

Authors

John C. Johnston, University of Michigan Law SchoolFollow

Abstract

Testatrix died in March, 1935 leaving 5,471 shares of N corporation stock in two trusts with directions that a portion of the income therefrom should be paid to her son during his life with remainder over to another. At the time of testatrix' death the N corporation had a large surplus, and had been paying regular quarterly dividends from current income. From April, 1935 to December, 1937 these quarterly dividends were continued at one dollar per share less than was customary, but because of business conditions they were paid partly from the surplus which had accumulated prior to the death of testatrix. These payments from surplus reduced the book value of the stock about seven dollars per share. The trustees petitioned the court for directions as to whether these dividends paid partly from surplus accruing before the time of the trust were to be treated as income and paid to the life beneficiary, or whether they were to be considered a return of capital and paid into the corpus of the trust. Held, since the will does not express testatrix' intent in this matter, these dividends are to be treated as ordinary cash dividends, and they are payable to the life tenant as income. In re Estate of Boyle, 235 Wis. 591, 294 N. W. 29 (1940).

Recommended Citation

John C. Johnston, TRUSTS - RIGHTS OF SUCCESSIVE BENEFICIARIES TO CORPORATE STOCK DIVIDENDS - ORDINARY AND EXTRAORDINARY DIVIDENDS, 39 Mich. L. Rev. 1253 (1941).
Available at: https://repository.law.umich.edu/mlr/vol39/iss7/24