distribution and receipt from a trust

[sojorner]

WE have a trust that is manged by a third party. We receive monthly reports, we also receive quarterly distributions and we are allowed to draw down principal from the trust with some restriction (max amount / year).
We have a general operation fund-01, and we had set up a trust / investment fund -02
So the questions are as follows:
1) when the quarterly distributions are made, can they recorded as a credit against the trust asset, and as a debit to a trust expense acct, and then as income to the fund-01 checking acct? Or do they have to be an asset exchange: CR trust asset fund-02, CR Checking fund-02 and then go through the transfer process?
2) same question when we do a drawdown of principal - I assume it would be the same as the above.
3) I would assume that I can do a standard income transactions to record the receipt of interest and dividends to the trust. All would be in fund-02. DB fund-02 trust asset, CR fund-02 trust interest / dividend income.
4) Can we update the trust' market value (asset), by doing an income acct - mrkt value Gain(Loss) - CR/ DB depending on the change.

Thanks

[NeilZ]

WE have a trust that is manged by a third party. We receive monthly reports, we also receive quarterly distributions and we are allowed to draw down principal from the trust with some restriction (max amount / year).
We have a general operation fund-01, and we had set up a trust / investment fund -02
So the questions are as follows:
1) when the quarterly distributions are made, can they recorded as a credit against the trust asset, and as a debit to a trust expense acct, and then as income to the fund-01 checking acct? Or do they have to be an asset exchange: CR trust asset fund-02, CR Checking fund-02 and then go through the transfer process?

Since you're moving funds, and you need to show that move in both funds, you need to use transfer accounts.

2) same question when we do a drawdown of principal - I assume it would be the same as the above.

Yup

3) I would assume that I can do a standard income transactions to record the receipt of interest and dividends to the trust. All would be in fund-02. DB fund-02 trust asset, CR fund-02 trust interest / dividend income.

Yup

4) Can we update the trust' market value (asset), by doing an income acct - mrkt value Gain(Loss) - CR/ DB depending on the change.

Thanks

I'm going to suggest that you look at this thread that I found by searching for "investment gain loss" .. saves me from repeating myself

[sojorner]

Neil,
Thank you for your reply, and I appreciate the search recommendation.
So, Having read that several times and did some excel spreadsheets simulations, I think I understand what you are doing - makes sense. I also did a search for tracking investment distributions / investment sales and didn't see anything that seemed to give me what I was looking for, so....
Given that process, I was wondering if I could do the following for actual distributions / draw-downs:
If I set up the following accounts:
02-1310-000 Primary Checking Detail Asset Account
02-1320-000 Trust Group Asset Account
02-1322-000 Trust Value Detail Asset Account
02-1324-000 Trust Unrealized Gain/loss Detail Asset Account
02-1326-000 Trust Qrtrly Distribution Detail Asset Account
02-1328-000 Trust DrawDown Detail Asset Account
Trust Detail asset accounts are set to the same level so as to provide a Group sub-total.
I'm not including the income accts for unrealized gain /loss, since you covered that pretty well.

If I recorded the qrtrly distributions as:
DB: 02-1310-000 Checking account
CR: 02-1326-000 Trust qtrly distribution account
The group summary would provide an on-going value of the trust, and it will also track the distributions over time
The same would apply to the drawdown accts also.
I know that ordinarily, these transactions would simply be a CR to the Trust Value Account and a DB to the Primary Checking Account. But, unless you have multiple balance sheets to compare over time - it would be difficult to follow. So, would these work? Do you see any issue with this approach? The Trust Value account would only be adjusted for realized income, realized gains/losses, and assessed fees(expenses).
Thanks
Doug

[NeilZ]

Neil,
Thank you for your reply, and I appreciate the search recommendation.
So, Having read that several times and did some excel spreadsheets simulations, I think I understand what you are doing - makes sense. I also did a search for tracking investment distributions / investment sales and didn't see anything that seemed to give me what I was looking for, so....
Given that process, I was wondering if I could do the following for actual distributions / draw-downs:
If I set up the following accounts:
02-1310-000 Primary Checking Detail Asset Account
02-1320-000 Trust Group Asset Account
02-1322-000 Trust Value Detail Asset Account
02-1324-000 Trust Unrealized Gain/loss Detail Asset Account
02-1326-000 Trust Qrtrly Distribution Detail Asset Account
02-1328-000 Trust DrawDown Detail Asset Account
Trust Detail asset accounts are set to the same level so as to provide a Group sub-total.
I'm not including the income accts for unrealized gain /loss, since you covered that pretty well.

If I recorded the qrtrly distributions as:
DB: 02-1310-000 Checking account
CR: 02-1326-000 Trust qtrly distribution account
The group summary would provide an on-going value of the trust, and it will also track the distributions over time
The same would apply to the drawdown accts also.
I know that ordinarily, these transactions would simply be a CR to the Trust Value Account and a DB to the Primary Checking Account. But, unless you have multiple balance sheets to compare over time - it would be difficult to follow. So, would these work? Do you see any issue with this approach? The Trust Value account would only be adjusted for realized income, realized gains/losses, and assessed fees(expenses).
Thanks
Doug

Doug,

I'm trying to understand why you're crediting the distribution asset? Usually you would credit an income account. When the bank does a distribution does it reduce the amount of the trust principal ??

SO if the trust has 1000.00 and they send you 100 the principal is decreased to 900 ??

[sojorner]

Neil,
Yes, the value of the trust will decrease by the amount distributed. Generally, this would be simply a transfer of Assets from the trust to our checking account, since the trust is on our books for the full value. I was told that such distributions should be treated similarly to transferring money from the savings to checking or transfers from one asset to another. What I'm looking to do is to be able to visibly 'track' the withdrawals / distributions.
IF the Trust was not on our books, then the distribution could be treated as an income.

[NeilZ]

Well in theory .. it looks like it will work, I would talk to an accountant to verify that just to be sure.