In order to be a legal trust, it must have property. Trust property is separated into income property and principal property. Many times a trust will specify who is to receive the income property and a different set of people will receive the principal income. For joint trusts, when the first spouse passes away, the trust can restrict the surviving spouse's ability to access the principal of the trust and limit him to only using the income during his lifetime. The principal is reserved for the children and to be distributed after the death of the second spouse. This is can be in cases where the trust has income producing property such as rental income or generates interest or dividends.
Without any restrictions, the surviving spouse could use the principal and interest as he or she sees fit. The distinction between interest and principal can get muddled at times. Probate Code Section 16320 through 16375 sets forth the guidance...
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