Separate Accounting for Trust-Owned Businesses
A family trust might own a ranch, a small business, rental properties, or mineral rights. Running these alongside typical trust assets can get complex.
This statute gives the trustee a practical tool. The trustee can keep a detailed record of transactions for any business inside the trust.
If a trustee who conducts a business or other activity determines that it is in the best interest of all of the beneficiaries to account separately for the business or activity instead of accounting for it as part of the trust's general accounting records, the trustee may maintain separate accounting records for its transactions, whether or not its assets are segregated from other trust assets.
A.R.S. § 14-7412(A)This matters because business operations have their own cash flow needs. For example, a farm might hold cash for equipment or seed.
A rental property might need reserves for repairs. Mixing everything with the trust's investment income would make both harder to manage.
Deciding What Stays in the Business
The trustee decides how much of the net cash receipts to keep for working capital. This includes funds for replacing fixed assets and other expected needs.
Whatever remains gets classified as principal or income in the trust's general records. If the trustee sells business assets outside normal operations, the net proceeds go to principal.
The statute covers many activity types. These include retail, manufacturing, service work, farming, livestock, rentals, mineral extraction, and timber.
Good separate accounting protects both current income beneficiaries and future remainder beneficiaries. It keeps business choices clear and well documented.