A cemetery operator recently expressed his frustration with the trust officer of his care fund trust.   An examination of the trust had cited the operator for inappropriate distributions from principal with regard to expense payments.  We suggested to the operator that it is very common for trustees to set up care fund accounts with a principal account and an income account.  The income account is often set up to be held in cash equivalents because it is anticipated the account will be distributed frequently.  If the cemetery allows the income account to accumulate and sit in cash, the trustee could be questioned about the duty to make those funds productive.  Some fiduciary institutions have strict guidelines about how long funds can be left ‘idle’.  Accordingly, trustees will transfer the idle income cash to the principal account so that it can be reinvested.   The trustee may then look to the principal account to pay fees when the income account is insufficient.  The regulatory auditor may not have time to look any deeper than the distributions summary of the trust transactions report.   The operator and trustee then need to determine if the income distributions plus principal expense payments exceed income.