An estate's lawyers and accountants work in tandem with the estate's trustee to figure out the best way to allocate assets and earn an interesting return on investments over time. By working collaboratively, estate overseers take to heart heirs' messages of prudent investment and gradual asset growth, allocating income wisely and preserving or enhancing the value of the estate's corpus, or deceased's assets.
Allocating income means distributing money coming from an investment activity, a commercial undertaking, a joint venture with domestic or foreign business partners, or all of the above. Here the main goal is to get together with other people or companies that have similar objectives, get a project underway, derive the maximum profit from it and allocate the money to all participating parties. Income allocation calls for financial savvy, accounting expertise, being good with numbers and a sense of business ethics -- all of these abilities go a long way toward strengthening investor camaraderie and preventing litigation that often comes with unfair revenue distribution.
Estate corpus refers to all the money, property and intangible resources that belong to a deceased person. Property can be anything physical, including equipment, long-term investments and land, as well as commercial and residential establishments. An estate's intangible assets may include things like partial or full ownership of patents, trademarks and copyrights; wholly owned exclusivity rights; and customer goodwill and name recognition, as is often the case for celebrities. Various professionals -- including accountants, financial planners, tax specialists and estate attorneys -- help heirs and family representatives administer a deceased person's holdings.
In estate planning and management, income allocation and corpus interrelate although both concepts are distinct. This closeness happens in the way an administrator or court-appointed trustee runs the estate, as well as in the legal minutiae that people want lawyers to include in their wills while they're still alive. In essence, an estate's administrators use money from the corpus to seize economic opportunities, invest in financial markets, make more money, pay the estate's operating activities, and distribute income to heirs or other designates according to the will. The testament also may require that the estate administrator distribute part of the corpus' income to advance a social initiative, such as giving to charity, supporting academic research or fostering a humanitarian or animal-protection cause.
An estate's accountant reports the corpus in a statement of financial position, also called a balance sheet or statement of financial condition. Income that estate holdings generate flow into a statement of profit and loss, or income statement.
- Cornell University Law School: United States Code; Section 661. Deduction for Estates and Trusts Accumulating Income or Distributing Corpus
- University of Central Florida: Chapter 20 -- Income Taxation of Trusts & Estates (2011 Edition); Charles F. Kelliher; March 2011
- Iowa State University: Estate Planning; December 2005
- BusinessDictionary.com: Corpus