Current and Remainder Beneficiaries

C

None of these choices is the correct answer. Current life-income beneficiaries prefer to receive high rate of current income, while remaindermen would rather have growth and stability of principal.

In the context of beneficiaries and remaindermen, current life-income beneficiaries and remaindermen have different preferences regarding the distribution of income and principal.

Current life-income beneficiaries refer to individuals who receive income from a trust or an estate during their lifetime. Their primary preference is to receive a high rate of current income. This means that they value receiving a substantial amount of income regularly, which helps them meet their financial needs and maintain a certain standard of living. Current life-income beneficiaries typically rely on the income generated by the trust or estate to support themselves.

On the other hand, remaindermen are individuals or entities who become entitled to the remaining assets or principal of a trust or an estate after the current life-income beneficiaries have passed away or no longer have an interest. Remaindermen, in contrast to current life-income beneficiaries, prefer the growth and stability of principal. This means that they value the preservation and appreciation of the assets over time. Remaindermen are typically interested in maximizing the value of the principal so that they can benefit from it once they become the primary beneficiaries.

Now let's analyze the answer choices:

A. a minimal current income; a high rate of current income: This answer is incorrect because it suggests that both current life-income beneficiaries and remaindermen prefer a high rate of current income. However, as explained above, current life-income beneficiaries prefer a high rate of current income, but remaindermen prefer the growth and stability of principal.

B. small incremental principal repayments; predictable current income: This answer is also incorrect because it implies that current life-income beneficiaries prefer small incremental principal repayments. However, current life-income beneficiaries are primarily concerned with receiving a high rate of current income, rather than receiving principal repayments. Remaindermen, as mentioned earlier, prioritize the growth and stability of principal rather than predictable current income.

C. none of these answers: This answer is incorrect because it disregards the differing preferences of current life-income beneficiaries and remaindermen.

D. growth and stability of principal; a high rate of current income: This is the correct answer. It accurately reflects the preferences of beneficiaries and remaindermen. Current life-income beneficiaries prefer a high rate of current income, while remaindermen prefer the growth and stability of principal.

In summary, current life-income beneficiaries prefer a high rate of current income, whereas remaindermen prefer the growth and stability of principal. Therefore, the correct answer is D.