Question

Trustee placed $10,000 of his own money and $10,000 of trust money into a single investment account that required a $20,000 minimum investment. The investments were successful, and the account is now worth $40,000. How the money should be allotted?

A trustee may not commingle trust property with his own property. If a portion of commingled assets increase in value, it is presumed that the assets belonging to the trust increased in value. Here, the entire amount of increase, $20,000, will be allotted to the trust. Trustee will get his initial investment back. Thus, Trustee is entitled to $10,000, and the trust is entitled to $30,000. (T/F)

Answer 1

True the trustee does not have access to the gain on the investment.

Step-by-step explanation:

All increase in trust is for the benefit of the trust.

Ideally, the trustee should not commingle his own funds with the trust funds. So he does not have access to gains on the trust, notwithstanding part of his money is there.

Trustee is only entitled to take back the money he put in the trust (that is $10,000).

The gains ($20,000) and initial money of the trust ($10,000) all goes to the trust (total amount of $30,000).