Trust Fund Payout Calculator (Income vs Principal)
Project trust distributions over time under income-only, unitrust (% of balance), or fixed-annuity payout methods, and see when payouts dip into principal. Educational, not legal advice.
| Year | Start | Growth | Payout | From principal | End |
|---|---|---|---|---|---|
| 1 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
| 2 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
| 3 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
| 4 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
| 5 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
| 6 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
| 7 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
| 8 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
| 9 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
| 10 | $1,000,000 | $60,000 | $60,000 | — | $1,000,000 |
Income-only distributes the year’s earnings and preserves principal. A unitrust pays a fixed percentage of the (re-valued) balance, so payouts rise and fall with the trust. A fixed annuity pays a set dollar amount, which dips into principal whenever returns fall short (shown in the “from principal” column) and can deplete the trust. Trust accounting distinguishes income from principal under state law and the trust document, with real tax treatment that differs by beneficiary. Not financial or legal advice — consult a professional. Everything runs in your browser.
About this tool
Trusts distribute money to beneficiaries under rules set by the trust document, and one of the most important distinctions in trust administration is between income and principal. Income is what the trust assets generate — interest, dividends, and similar earnings — while principal (or corpus) is the underlying capital. How a trust pays out determines whether the principal is preserved, grows, or is gradually consumed, which directly affects both current beneficiaries (who want income now) and remainder beneficiaries (who inherit what is left). This calculator projects a trust's balance and distributions year by year under three common payout methods. 'Income only' distributes just the year's investment earnings and leaves the principal intact, so payouts vary with returns but the corpus is preserved for remainder beneficiaries — the classic approach when a trust must balance a current beneficiary against future ones. A 'unitrust' pays a fixed percentage of the trust's value as re-measured each year, so distributions rise and fall with the portfolio and the percentage (often around 3–5%) is chosen to roughly preserve real value over time. A 'fixed annuity' pays a set dollar amount regardless of performance; it gives the beneficiary predictability but eats into principal whenever returns fall short — the tool's 'from principal' column shows exactly when and how much, and a fixed payout that exceeds returns will eventually deplete the trust. Real trust accounting is governed by state principal-and-income acts and the trust instrument, and the tax treatment of distributions differs for the trust and each beneficiary. Use this to understand the mechanics and trade-offs, not as a substitute for the trust document. It is educational and not legal or financial advice — consult a trust attorney or fiduciary. Everything runs in your browser; nothing is uploaded.
How to use it
- Enter the trust's current balance and expected annual return.
- Choose a payout method: income-only, unitrust (% of balance), or fixed annuity ($).
- For unitrust or fixed, set the payout rate or dollar amount.
- Set the number of years to project.
- Review the year-by-year table — payouts, what comes from principal, and the ending balance.
Frequently asked questions
- What is the difference between trust income and principal?
- Income is what the assets earn (interest, dividends); principal is the underlying capital. Many trusts distribute income to current beneficiaries while preserving principal for remainder beneficiaries. The payout method determines which is tapped.
- What is a unitrust payout?
- A unitrust pays a fixed percentage (commonly 3–5%) of the trust's value, recalculated each year. Distributions rise and fall with the portfolio, and the rate is typically set to roughly preserve the trust's real value over time.
- How does a fixed annuity payout differ?
- It pays a set dollar amount each year regardless of performance. It gives predictable income but draws from principal whenever returns fall short, and a payout above the return rate will gradually deplete the trust — shown in the "from principal" column.
- Which payout method preserves the trust longest?
- Income-only never touches principal, so the corpus is preserved (and grows if returns exceed distributions). A unitrust adapts to performance. A fixed annuity carries the highest depletion risk when returns are low.
- How are trust distributions taxed?
- It depends on the trust type and whether income is distributed or retained. Distributed income is often taxed to the beneficiary; retained income may be taxed to the trust at compressed rates. This tool does not model taxes — consult a tax professional.
- Is this legal advice?
- No. Trust accounting is governed by state law and the trust document. This is an educational projection of the mechanics — consult a trust attorney or fiduciary. Nothing is uploaded.