Legal Definitions - Uniform Principal and Income Act

The Uniform Principal and Income Act is a set of rules that some states have adopted to determine how to allocate the principal and income in trusts and estates.

For example, if a trust has $100,000 in principal and earns $5,000 in interest, the Uniform Principal and Income Act would determine how much of that $5,000 should be distributed as income to the beneficiaries and how much should be added to the principal.

Another example would be if an estate owns a rental property. The Uniform Principal and Income Act would determine how much of the rental income should be distributed as income to the beneficiaries and how much should be added to the principal.

The purpose of the Uniform Principal and Income Act is to provide a clear and consistent set of rules for trustees and executors to follow when managing trusts and estates. This helps ensure that beneficiaries receive their fair share of the income and principal, and that the assets are managed in a responsible and transparent manner.