A productive trust is usually dynamic in two ways: the principal assets appreciate in value, and their use produces income. When the beneficial interests in such a trust are successively divided between income recipients and principal remaindermen, every payment to the trust must be characterized either as income or as an addition to principal. The most difficult categorization problems arise when the receipt is of corporate stock.
Michael C. Devine,
Principal and Income Allocation of Stock Distributions--The Six Per Cent Rule,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol64/iss5/5