Trust Income consists of the earnings generated by the trust principal, including interest, dividends, rental income, and other periodic returns produced by trust assets. Historically, income was paid to or used for the current beneficiary, while principal was preserved for future beneficiaries, creating a legally significant divide that impacted both taxation and distribution decisions. Today, many trustmakers prefer to minimize this rigid distinction by authorizing trustees to use both income and principal freely for the primary beneficiary. This modern approach prioritizes flexibility and quality of life, ensuring that the trust fulfills its purpose rather than preserving assets solely for remainder beneficiaries who may never receive them.
