Bradley J. Frigon, CELA, JD, LLM
Law Offices of Bradley J. Frigon
6500 S. Quebec St. Suite 330
Englewood, CO 80111
720-200-4025
www.bjflaw.com
Case Example
 A young lady, age 23, whose income is $225/week ($11,700/yr) comes
from a third party trust. In Florida, she cannot get Medicaid Expansion
because it doesn’t exist. She also cannot get the IRS Premium Tax Credits,
because her income has to be approximately $16,000 per year.
 If she has “Modified Adjusted Gross Income” of $16,000 per year, she can
buy private health insurance for
 Monthly Premium = $8/mo.
 Annual Deductible = $500/yr
 Maximum Out-of-Pocket = $750/yr.
 Copayments/Coinsurance:
 Primary Doctor: $25
Specialist Doctor: $35
Generic Prescription: 17
ER Visit: 20% Coinsurance after deductible
Case Example (cont.)
 We can get her on Florida Medicaid’s “Medically Needy” program,
but her monthly cost is $805/mo.
 So, ironically, we can get her Medicaid for $805/month with all of its
limitations, or we can get her on private insurance (selecting one of
137 different carriers and plans – PPOs, EPOs, HMOs) where she is
guaranteed by ACA the right to select her doctor, has no annual or
lifetime limits (which Medicaid DOES have), etc. for private
insurance cost of $8/month.
 But ONLY if we can increase her taxable income to $16,000. Her
current $11,700 isn’t enough under the MAGI calculations to trigger
the IRS Advanced Tax Credits.
Introduction
 Under
the Patient Protection and
Affordable Care Act (ACA; P.L. 111-148, as
amended), the definition of income for
eligibility
for
certain
Medicaid
populations and premium credits in the
exchanges is based on modified adjusted
gross income (MAGI).
Medicaid Eligibility and ACA
 States that choose to participate in this
ACA expansion will cover most nonelderly
citizens (including childless adults,
parents, individuals with disabilities) up
to 133% FPL, and the income that is
compared with this threshold for
individuals in this group will be based on
MAGI.
MAGI
 MAGI is equal to adjusted gross income (AGI)
plus certain foreign earned income and taxexempt interest. AGI is equal to gross income
minus certain exclusions (e.g., public
assistance payments, contributions to
retirement plans) minus some above-the-line
deductions (e.g., trade and business
deductions, losses from sale of property, and
alimony payments.
Income Eligibility for Premium
Credits
 Beginning in 2014, qualifying individuals will
be able to receive premium tax credits toward
the purchase of exchange coverage. The credit
is an advancable, refundable tax credit,
meaning taxpayers need not wait until the
end of the tax year to benefit from the credit
(advance payments will actually go directly to
the insurer) and may claim the full credit
amount even if they have little or no federal
income tax liability.
Amount of Premium Credits
 The amount of the tax credit will vary from person to
person: it depends on the MAGI of the tax-filer (and
dependents), the premium for the exchange plan in
which the tax-filer (and dependents) is (are) enrolled,
and other factors. In certain instances, the credit
amount may cover the entire premium and the taxfiler will pay nothing toward the premium. In other
instances, the taxpayer may be required to pay part
(or all) of the premium.
Amount of Premium Credits
(cont.)
 For this latter scenario, the amount that a taxpayer
who receives a premium credit would be required to
contribute toward the premium is capped as a
percentage of MAGI. That percentage will be less for
those with lower MAGI compared with those with
higher MAGI, where income is measured based on
MAGI relative to the FPL. For tax payers with MAGI
between 100% FPL and 133% FPL, the amount they
would be required to contribute toward the premium
will be capped at 2% of MAGI.
Amount of Premium Credits
(cont.)
 For taxpayers with income 300%-400% FPL, their
premium contribution will be capped at 9.5% of MAGI.
ACA further specified the “applicable percentages” that
premium credit recipients, whose incomes are between
those two MAGI bands, would be required to pay toward
the cost of exchange coverage. The premium credit
amount would be the arithmetical difference (if any) after
subtracting the maximum premium contribution amount
from the premium for the second-lowest-cost silver plan
in the enrollee’s local area.
Income Source
Gross Income
Adjusted Gross
Income
Modified Adjusted
Gross Income
Fully Included
Wages, Salary
Yes
Yes
Yes
Interest
Yes
Yes
Yes
Dividends
Yes
Yes
Yes
Alimony and Separate
Maintenance Payments
Yes
Yes
Yes
Life Insurance and
Endowment Contracts
Yes
Yes
Yes
Estate or Trust Interest
Income
Yes
Yes
Yes
Interest on State and Local
Bonds (tax-exempt interest)
No
No
Yes
Prizes or Awards
Yes
Reimbursement of Moving
Expenses
Yes
Yes
Yes
Yes
Income Source
Gross Income
Adjusted Gross
Income
Modified Adjusted
Gross Income
Social Security and
Tier 1 Railroad
Retirement Benefits
Yes
Yes
Yes
Partially Included In MAGI
Annuities
Yes
Yes (partial)
Yes (partial)
Pension Benefits
Yes (partial)
Yes (partial)
Yes (partial)
Partnership Gross
Income
Yes
Yes (less deductions) Yes (less deductions)
Earned Income of US Yes (partial)
Citizen Living Abroad
Yes (partial)
Yes (partial)
Retirement
Contributions
Yes (partial)
Yes (partial)
Yes (partial)
Business (including
Property, Rental, or
Royalties) Income
Yes
Yes (less deductions) Yes (less deductions)
Income Source
Gross Income
Adjusted Gross
Income
Fully Excluded from MAGI
Modified Adjusted
Gross Income
Income from
Discharge of
Indebtedness
Yes
Yes
Yes
Gifts and Inheritance Yes
Yes
Yes
Death Benefits
Yes
Yes
Yes
Cafeteria Plans
Yes
Yes
Yes
Certain Fringe
Benefits
Yes
Yes
Yes
Contributions to
Defined
Contribution Plans
Yes
Yes
Yes
Trust Tax Rates
 Except for a grantor trust, a trust is taxed as a separate entity
for federal income tax purposes. A non-grantor trust has
similar tax rates as individuals under §1 of the Internal
Revenue Code of 1986, as amended (the Code). Although
similar tax rates (15%, 25%, 28%, 33%, and 35%) apply to
both individuals and trusts, the tax brackets for a trust are
more compact than for an individual.
 In 2013, a trust with taxable income over $11,950 is taxed at
a 39.6%-rate bracket. In contrast, an unmarried individual
must have taxable income over $400,000 to reach the 39.6%
rate bracket for 2013 (or taxable income of $450,000 for
married individuals filing joint returns).
Understanding the Definitions in
Subpart E
 Whether one seeks to create a grantor trust or to
avoid grantor trust status, one must become
closely familiar with the list of powers that make
the grantor (or another) the deemed owner of all
or a portion of the trust.
 A grantor trust is not treated as a separate
taxpayer. Instead, the income from a grantor trust
is taxed to the grantor (or sometimes to another
person) because he or she holds some prescribed
interest in or control over the trust’s assets.
Grantor Trust Rules
IRC Sections 671-678
 If the trust violates one provision of grantor trust rules, then
trust is taxed as a grantor trust. Violating one of the "grantor
trust" rules for income tax purposes is generally fairly easy.
 IRC §677 provides that "the grantor shall be treated as the
owner of any portion of a trust, . . . whose income without
the approval or consent of an adverse party, is, or in the
discretion of the grantor or a nonadverse party, or both, may
be distributed to the grantor or the grantor's spouse; [or]
held or accumulated for future distribution to the grantor or
the grantor's spouse; . . .."
 What could be a clearer description of a (d)(4)(A) special
needs trust?
Grantor Trust Powers
 In addition to Section 677, Subpart E enumerates several
powers, any one of which will render the grantor or
some other person as the owner of all or a portion of the
trust for federal income tax purposes.
 The grantor retains a power to revoke the trust.
(Section 676).
 The grantor has a reversionary interest in either
principal or income and the value of the reversion is
worth at least 5% of the value of the property subject
to the reversion at the time the reversionary interest
is created. (Section 673).
 Certain Administrative Powers under Section 675.
Adverse Party (AP) and Nonadverse
Party (NAP)
 An adverse party (AP) is anyone with a substantial beneficial interest in
the trust that would be adversely affected by the exercise or nonexercise of a power with respect to the trust. Not surprisingly, a
nonadverse party (NAP) is anyone who is not an AP. Generally, if a trustrelated power is exercisable only with the consent or permission of an
AP, such power by itself will not render the power-holder the tax owner
of the portion of the trust to which the power relates. (Section 672(a))
 What does it mean to have a substantial beneficial interest in the trust?
A general power of appointment over all or a portion of the trust
property is sufficient. Beyond that, however, Treasury will only say that
“[a]n interest is a substantial interest if its value in relation to the total
value of the property subject to the power is not insignificant.”
Family Member Serving As Trustee
 Often the trustee of a (d)(4)(A) trust is a parent or other
family member. A family member serving as trustee would
be an “adverse party” if that family member is also a
residual trust beneficiary.
 In other words, the trustee is adversely affected as a
residuary beneficiary to the extent he or she exercises his or
her power to consent to distributions to the primary
beneficiary. When the trustee makes a distribution he or
she logically has to make it with his or her own consent, i.e.,
with the consent of an "adverse party". As a result, the
trust may be taken out of "grantor trust" treatment.
Can I Get Grantor Trust Status with a Family
Member Serving As Trustee? (cont.)
 Don’t be fooled by IRC §674(b)(3) which expressly takes out
of Grantor Trust treatment a power "exercisable only by will"
to appoint the income of the trust where the income is
accumulated for such disposition by the grantor or may be so
accumulated in the discretion of the grantor or a nonadverse party, or both, without the consent or approval of
any adverse party.
 Although IRC §674(b)(3) appears to take a testamentary
limited power of appointment out of grantor trust treatment,
the reference under §674(b)(3) is to ordinary income and not
accounting income. Because SNT allows Trustee discretion to
accumulate all income (and not just ordinary income),
§674(b)(3) does not apply.
Powers Invoking Grantor Trust Status
 Reversions: A reversion is a power to reclaim possession or
enjoyment of the trust property. To the extent the grantor
has a decent chance of reclaiming possession of property held
in trust, it is fair to consider the grantor as owner of the
property subject to the reversion.
 If the grantor holds a reversionary interest in any portion of
the trust’s principal or income, the grantor will be treated as
the owner of the portion of the trust if, at the inception of
that portion of the trust, the value of the reversion exceeds
5% of the value of the trust portion to which the reversion
relates. (Section 673).
Powers Invoking Grantor Trust
Status (cont.)
 Section 673 provides as follows:
 “The grantor will be treated as the owner of a trust or any portion of the
trust in which the grantor has a reversionary interest in either the
corpus or the income there from, if, as of the creation of the trust (or
such portion), the value of such interest exceeds 5% of the value of the
trust (or such portion).”
 For 673 to apply there must be a reversionary interest to the grantor.
Actuarial rules under Section 2031 are used to value the
reversion. Example: T creates a trust for 50 years for A. After 50 years,
the trust then terminates and reverts to the grantor T. If the interest rate
is 1.4% at the time the trust is created, the value of the reversion is
49.9%. Since it exceeds 5%, T would be treated as the grantor under
Section 673.
Reversions
 Section 673(c) is a valuation subsection to the general rule
stated in 673(a). In other words, 673(c) does not create an
additional category of rules to make a trust a grantor trust, it
is an instruction on how the reversionary interest must be
valued.
 “673(c) Special Rule For Determining Value Of Reversionary
Interest
 For purposes of subsection (a), the value of the grantor's
reversionary interest shall be determined by assuming the
maximum exercise of discretion in favor of the grantor.”
Reversions (cont.)
 For example, a grantor funds a discretionary trust for the
benefit of his children to last for 20 years. At the
expiration of the 20 year period, the trust fund is to revert
to the grantor. In determining whether the trust is a
grantor trust under 673(a), the value of the grantor’s
reversionary interest at the inception of the trust needs
to be determined by assuming the maximum exercise of
discretion in favor of the grantor. This means that in
determining the value of the grantor’s reversionary
interest, 673(c) requires an assumption that no
distributions are made to the grantor’s children during
the trust’s 20 year term.
Reversions (cont.)
 A well drafted SNT will require the trustee to exercise
maximum discretion in favor of the beneficiary. The trust
document also provides that the grantor (beneficiary) cannot
compel the trustee to make any distributions to or for the
benefit of the grantor (beneficiary). If the document provided
otherwise, it would not be a valid first party SNT.
 The exercise of maximum discretion for the benefit of the
grantor (beneficiary) is not a reversionary interest as
contemplated under Section 673(a). As previously explained,
673(c) is a direction on how a reversionary interest is to be
valued.
It does not impose grantor tax status to a
discretionary trust where no reversionary interest exists in the
first place.
Administrative Powers
 Section 675 lists six administrative powers that give rise to
grantor trust status. Planners seeking grantor trust status
therefore, may obtain it by adding one of these powers to
the trust instrument, although it should be noted that the
addition of some of these powers alone will not make the
grantor the deemed owner of the entire trust, since the
powers may only relate to a portion of the trust (i.e.,
income or principal). On the other hand, planners seeking
to avoid grantor trust treatment should make sure that
the following powers are not included in the trust
instrument.
Power to Reacquire Trust Assets by
Substitution
 A power held by anyone in the nonfiduciary capacity to
“reacquire the trust corpus by substituting other property of an
equivalent value” will cause the grantor to be the deemed
owner of the trust property. The same presumption that a
trustee would exercise such a power in a fiduciary capacity
applies here.
 The use of the word “reacquire” connotes that only the grantor
could have this power, since no one else can “reacquire”
property transferred by the grantor. But the statute expressly
states that the power may be held by “any person” and the IRS
has informally concluded that grantor trust status occurs even
when someone other than the granter holds the power.
Inter Vivos Third Party SNT
 How to avoid grantor trust status for parents:
 Control powers. Name independent trustee.
 No Reversionary interest.
 Power to control beneficial enjoyment, Section 674:



Power to control principal distributions. The power to
control principal distributions will not be imputed to parents
if the distribution standard is limited to a reasonably
measurable standard.
Power to distribute for the
“maintenance, education, support or health” of a beneficiary
is a reasonably measurable standard. A power to distribute
for the “happiness, desire or pleasure” will not qualify.
Power to control income distributions. The power to control
income distributions is not imputed to grantor if the
document allows income to be accumulated for beneficiary
with a disability.
The Trust document cannot contain any of the six prohibited
administrative powers.
Simple or Complex Trust
 If the grantor is not deemed as the owner of a portion
of the trust assets, then the trust is taxed as a separate
entity for federal income tax purposes. If a trust is taxed
as a separate entity then it will be taxed as a simple or
complex trust unless the trust is a charitable trust.
 Simple Trust- Mandatory distribution of income.
 Complex Trust- Discretionary distribution of income.
Simple – Complex Trusts
 Distributable Net Income (DNI).
 It limits the deductions allowable to estates and trusts for amounts paid,
credited, or required to be distributed to beneficiaries and is used to
determine how much of an amount paid, credited, or required to be
distributed to a beneficiary will be includible in his gross income. It is also
used to determine the character of distributions to the beneficiaries.
Distributable net income means for any taxable year, the taxable income
(as defined in section 63) of the estate or trust, computed with the
modifications set forth in §§1.643(a)–1 through 1.643(a)–
 Amount that the beneficiary must take into income;
 Amount that trust can claim as a distribution deduction.
Capital Gains Excluded from DNI
Computation
Gains from the sale or exchange of capital assets are
ordinarily excluded from DNI and ordinarily are not
considered as paid, credited or required to be distributed
to any beneficiary unless they are, pursuant to the terms
of the governing instrument and applicable local law, or
pursuant to a reasonable and impartial exercise of
discretion by the fiduciary (in accordance with a power
granted to the fiduciary by applicable local law or by the
governing instrument if not prohibited by local law.
Section 643(a)(3).
Gross Income and Exclusions
 The General definition of gross income applies to a trust.
§ 61 defines gross income to mean “income from
whatever source derived, including (but not limited to)”
items of income specifically enumerated in that section.
 Some of the specially enumerated items that generally
apply to a trust are interest, dividends, rents, royalties,
gross income derived from business, the distributive
share of a partnership’s gross income, income from an
interest in an estate or trust, income from life insurance
and endowment contracts, gains derived from dealings in
property, and income in respect of a decedent.
Deductions
 A trust is entitled to various deductions if it holds property for
the production of income, whether for current income or longterm growth. These transactions are usually investments
entered into for profit. The deductions in this group include
deductions for:
 (a) ordinary and necessary expenses paid or incurred (i) for
the production or collection of income, or (ii) for the
management of property that is held for the production of
income, including administration expenses such as fees for
executors, trustees, attorneys, and accountants;
 (b) interest paid or incurred on indebtedness properly
allocable to property held for investment (subject to the
restrictions on investment interest and passive activity losses);
Deductions (cont.)
 (c) taxes paid or incurred in connection with the
production of income or property held for the
production of income;
 (d) losses incurred in a transaction entered into for
profit, not connected with a trade or business
(including any short-term capital loss resulting from
the total worthlessness of a non-business bad debt),
subject to the limitations on capital losses;
 (e) depreciation of property held for the production of
income, but only to the extent the deduction is not
allocable to the beneficiaries of the trust.
Other General or Personal
Deductions
 A trust is entitled to certain deductions that are not
dependent upon the trust engaging in a trade or business,
an income-producing activity, or a profit transaction.
These include deductions for:
 (a) ordinary and necessary expenses paid or incurred
for tax advice and representation, with respect to the
determination, collection or refund of any tax;
 (b) personal casualty or theft losses, subject to the
$100 deductible and the 10% adjusted gross income
limitations;
Other General or Personal
Deductions (cont.)
 (c) taxes set forth in § 164, including real and personal
property taxes, state income taxes, and the GST tax
imposed on income distributions;
 (d) charitable contributions for amounts paid for charitable
purposes (or set aside for such purposes under certain preOctober 9, 1969, trusts); and
 (e) a personal exemption of $300 for a trust required to
distribute all income currently, whether a simple or
complex trust for the year, and $100 for all other trusts
(other than qualified disability trusts).
Miscellaneous Itemized Deduction
Subject to 2% Floor
 For individuals, estates, and trusts, miscellaneous
itemized deductions for any taxable year are allowed
only to the extent that the aggregate of such
deductions exceeds 2% of adjusted gross income.
 The proposed regulations provide that a cost is
subject to the 2% floor to the extent the cost is: (1)
included in the definition of miscellaneous itemized
deductions; (2) incurred by an estate or non-grantor
trust; and (3) commonly or customarily incurred by a
hypothetical individual holding the same property.
Trust Payments for Personal
Expenses of Beneficiary
 Payments from the trust for personal expenses of the
beneficiary (care providers, transportation, medical
expenses, ect) are not a deductible expense for trust
administration purposes.
 A payment from the trust for personal expenses of the
beneficiary will be treated as a distribution for the benefit
of the beneficiary and, for income tax purposes, be
classified as a distribution of trust income or principal.
65 Day Rule – Complex Trust
 With respect to discretionary distributions, whether
of income or principal, the year of payment by the
trust will generally be the year of deduction and will
set the year for determining inclusion of the
payment. If within the first 65 days of the taxable
year of a trust an amount is properly paid or credited
and if the fiduciary makes a proper election, the
distribution is treated as having been made on the
last day of the preceding taxable year.
65 Day Rule- Complex Trust (cont.)
 While the distribution must be made within 65 days of
the new year, the election must be made no later than
the deadline for filing the fiduciary income tax return for
the taxable year for which the distribution is treated as
made, plus extensions. In rare cases, a further extension
may be allowed. Because trusts must use the calendar
year, the elections deadline for trusts is April 15, plus any
extensions.
Investment Income
 Beginning in 2013, certain investment income will be subject to an
additional 3.8% surtax, enacted as part of the Health Care and Education
Reconciliation Act of 2010 (commonly called the “Medicare Surtax”). This
tax will also have to be taken into account for estimated tax
purposes. For trusts, the 3.8% surtax is imposed on the lesser of (i)
undistributed Net Investment Income (NII) or (ii) the excess of adjusted
gross income over the dollar amount at which the highest trust income
tax bracket begins ($11,950 for 2013). With such a low threshold, the
surtax could apply much more easily to non grantor trusts than to
individuals. There is one respect in which the surtax applies to trusts
much differently than it applies to individuals: the concept of
“undistributed NII.” Trusts are subject to a set of income tax rules where
if the trust earns income but distributes it to the beneficiaries, then the
beneficiaries are taxed on that distributed income (as discussed above in
the preceding paragraph). If the trust retains the income, then the trust
is taxed on that retained income. If the trust distributes some of its
income but also retains some, then the beneficiaries are taxed on the
portion distributed, and the trust is taxed on the portion retained.
Examples
 Taxable Income
Taxable Interest
$ 4,500.00
 Tax exempt interest
$ 500.00
 Dividends
$10,000.00
 Capital Gains
$10,000.00
 Total Income
$25,000.00
Deductions
 Trustee fees
$ 5,000.00
 Attorney fees $ 5,000.00
Trust Distributions for the benefit of the beneficiary for
Example 1 and 2 total $20,000.00
The Beneficiary only income is SSI payments $8,544.00.


Example- One
 Taxable Income for a Complex Trust.
 Taxable Income
Taxable Interest
 Tax exempt interest
 Dividends
 Capital Gains
 Total Income
Deductions
 Trustee fees
 Attorney fees
Gross Income
Less Exemption
Distributions to beneficiary
 2013 Trust Tax Liability
 MAGI *
 2013 Beneficiary Tax Liability





$ 4,500.00
$ 500.00
$10,000.00
$10,000.00
$25,000.00
$5,000.00
$5,000.00
$15,000.00
$3,900.00
$20,00000
$6,100.00
$5,000.00
$0.00
*Adjusted $168 for tax exempt interest.
Example- Two
 Taxable Income for a Complex Trust.
 Taxable Income
Taxable Interest
 Tax exempt interest
 Dividends
 Capital Gains
 Total Income
Deductions
 Trustee fees
 Attorney fees
Gross Income
Less Exemption
Distributions to beneficiary
 2013 Trust Tax Liability
 MAGI *
 2013 Beneficiary Tax Liability





$ 4,500.00
$ 500.00
$20,000.00
$25,000.00
$5,000.00
$5,000.00
$15,000.00
$3,900.00
$20,00000
$0.00
$15,000.00
$0.00
*Adjusted $300 for tax exempt interest.
Example- Three
 Taxable Income for a Grantor Trust.
 Taxable Income







Taxable Interest
Tax exempt interest
Dividends
Capital Gains
 Total Income
Deductions
Trustee fees
Attorney fees
$ 4,500.00
$ 500.00
$10,000.00
$10,000.00
$25,000.00
$5,000.00
$5,000.00
 2013 Trust Tax Liability
 MAGI*
 2013 Beneficiary Tax Liability
*Adjusted $500 for tax exempt interest.
$0.00
$25,000.00
$0.00
Tax Due
 Trustee fees and expenses are itemized deduction to
beneficiary subject to 2 % floor.
 In 2013, the standard deduction for a single individual
is $6,100.
 Beneficiary cannot deduct trustee fees since standard
deduction exceeds the beneficiary’s itemized
deductions listed on Schedule A. Does not impact
MAGI since only deduct above the line deductions
from Gross Income to calculate MAGI.
 Although SSI payments are not taxable, SSDI payments
may be potentially taxable if beneficiary’s income
exceeds threshold. Taxable portion of SSA payments
are not part of MAGI.
Planning Opportunities – Impact
MAGI
65 day Rule
Trust Toggle Provisions
Investment Allocations
Toggle Provisions
 The Grantors reserve the right to reacquire any property
constituting the Trust estate by substituting other property of
equivalent value; provided, however, that this power shall not
apply to any interest in a life insurance policy insuring the life of
the Grantors, to any residence that was contributed to the Trust
from a Qualified Personal Residence Trust of the Grantors and to
any voting stock of a controlled corporation within the meaning
of Section 2036(b) of the Code. The power to substitute property
shall not be exercised in a fashion that will shift the benefits of
the beneficiaries.
 The Trust Advisory Committee may appoint an Independent
Special Trustee who shall have the power and the absolute right,
exercisable in a non-fiduciary capacity and without the approval
or consent of any person in a fiduciary capacity, to revoke the
Grantors’ right to substitute property under this Section.
Toggle Provisions (cont.)
 If an Independent Special Trustee is appointed and revokes
the Grantors’ right to substitute property under this Section,
the Independent Special Trustee shall provide written notice
to the Grantors of such revocation, which revocation shall
only apply to such future tax years as the Independent
Special Trustee shall determine, and not to the tax year in
which the notice of the revocation of the right to substitute
property is given to the Grantors.
Investment Allocation
 How trust assets are invested will dramatically impact taxable
income.
 To increase income, investment allocation should focus on
dividend paying stocks, REITS, utilities, preferred stocks.
Understand the impact of an income driven investment
allocation to your beneficiary.
 Does your trust document allow you to invest exclusively for
income? Does your state follow Prudent Investor Rule?
 Work with an investment advisor that understands these
issues. I have worked out an arrangement to pool multiple
(smaller) trust accounts with one investment advisor.