Question

If the posting of a transaction which satisfies the Principal and Income Law conflicts with tax law, the Trustee must:

a. satisfy both Principal and Income law, and the tax law.
b. defer to the tax law.
c. defer to the Principal and Income law.
d. request regulatory direction.

Answer 1

A trustee must defer to tax law when it conflicts with Principal and Income Law, as tax laws have legal precedent and are requisite for government revenue collection.

Step-by-step explanation:

When a trustee faces a conflict between Principal and Income Law and tax law, the trustee must defer to the tax law. Tax laws are mandated by the government and carry legal weight that typically supersedes the guidelines set forth by the Principal and Income Law within a trust.

Furthermore, taxes must meet specific requirements; they should be equitable, simple, and efficient. If these attributes are met, it helps taxpayers understand the necessity of the levies, thereby promoting compliance.

Hence, while a trustee must try to respect the guidelines of the Principal and Income Law, the legal requirement to comply with tax laws will take precedence. In scenarios where ambiguity persists, it may be advisable to seek regulatory direction, but this is not the primary course of action.