3: Paragraph 36 Compounding that was the fact that a trust usually
has "income beneficiaries," who get the income for some definite or
indefinite period of time, and "remaindermen," who get what's left at
the end of that period. A trustee is required by law to keep track of
the trust's capital and income separately, because the trust's
beneficiaries have different interests, with the income beneficiaries
entitled to the income and the remaindermen entitled to the capital.
The fiduciary accounting is worse than the London 'Sunday Times'
crossword puzzle, and it's absolutely impossible without the records,
but Hitchcock hadn't activated the required data fields in SEI, and
neither he nor any of his clerks knew how to keep the records.
3: Paragraph 37 The complexity of the record-keeping and
tax-reporting is a large part of the reason fiduciaries get paid such
juicy trustees' fees, but somehow that concept had escaped the rocket
scientists at Hutton, too. Another reason for the fees is that trustees
have to make some hard decisions about distributing money from trusts:
Many trust documents give the trustees a lot of discretion about making
both investments and pay-outs, and if you've ever been in the middle of
a family squabble over a legacy you can appreciate that trustees earn
their fees. But Hutton skipped over those difficulties by letting the
AE on each account make all the investment and pay-out decisions, so all
Hutton Trust had to do to "earn" its fee was white-out and retype the
statements.
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