Variation of securities-executorship laws and accounts, Financial Accounting

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Variation of securities

It would seem logical to carry out a strict apportionment between income and capital every time investments are bought or sold. If this were done, it would be necessary to divide the purchase price or sale proceeds between the pure capital element and the adjustment of income rights.

In practice, this is not done, following the rules of convenience, on the grounds that it unnecessarily complicates the accounts.  The situation is, therefore, as follows:

1. Purchase of investment cum. div.  The life tenant is entitled to the whole income when received, except where the investment is purchased cum. div. after the dividend has been declared, when the whole dividend goes to capital (Re. Peel's Settled Estates).

2. Disposal of investment cum. div. The life tenant is not entitled to any of the sale proceeds (Scholefield v. Redfern).

3. Disposal of investment ex. div.  The whole dividend received after disposal belongs to the life tenant. Any organized course of action to the detriment of the life tenant or the remainderman would be actionable by that party as a breach of trust.


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