Corpus (Finance)

Definition

The term corpus refers to the principal of an estate or trust.  Corpus can also refer to the principal of a bond.

Explanation

The word corpus is derived from the Latin language and means "body."  While it can refer to a human body, it's also used when referring to a "collection of things."  In finance, the term can refer to the principal of a bond.  More commonly, it's used to describe the underlying assets placed in a trust.  In this context, it's oftentimes used to distinguish between the original capital placed in a trust versus the income derived from this capital, which is an important concept when discussing simple versus complex trusts.

Corpus versus Principal

While the terms corpus and principal are sometimes used interchangeably, the term principal is normally used in the context of a loan.  For example, the outstanding balance on a loan, or the money still needed to be repaid the lender, is referred to as the principal of the loan.  The term corpus is typically used in the context of an estate or trust.

Related Terms

fiduciary tax return, distributable net income, non-grantor trust, grantor trust