The 5x5 power allows withdrawal of the greater of $5,000 or 5% of the trust corpus annually. From which source is the withdrawal made?

• A. Trust income
• B. Corpus
• C. Both sources
• D. Neither

Answer: (B)

A 5x5 power is a right to withdraw from the trust’s principal. The amount—whichever is greater between $5,000 and 5% of the trust corpus—is tied to the value of the trust’s assets themselves, not just the income they generate. Because this rule uses the trust corpus as the basis for the withdrawal, the funds come from the principal, reducing the corpus. Income distributions come from earnings the trust generates, but the 5x5 provision explicitly targets the principal, not just the annual income. So the correct source is the trust corpus.