Modifies the Principal and Income Act to resemble the latest version of the Uniform Fiduciary Income and Principal Act

SECOND REGULAR SESSION
HOUSE BILL NO. 3246
103RD GENERAL ASSEMBL Y
INTRODUCED BY REPRESENT A TIVE P ARKER.
6565H.02I JOSEPH ENGLER, Chief Clerk
AN ACT
T o repeal sections 214.330, 469.401, 469.402, 469.403, 469.405, 469.409, 469.41 1, 469.413,
469.415, 469.417, 469.419, 469.421, 469.423, 469.425, 469.427, 469.429, 469.431,
469.432, 469.433, 469.435, 469.437, 469.439, 469.441, 469.443, 469.445, 469.447,
469.449, 469.451, 469.453, 469.455, 469.457, 469.459, 469.461, 469.463, 469.465,
and 469.467, RSMo, and to enact in lieu thereof forty-eight new sections relating to
trust and estate administration.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Sections 214.330, 469.401, 469.402, 469.403, 469.405, 469.409, 469.41 1,
2 469.413, 469.415, 469.417, 469.419, 469.421, 469.423, 469.425, 469.427, 469.429, 469.431,
3 469.432, 469.433, 469.435, 469.437, 469.439, 469.441, 469.443, 469.445, 469.447, 469.449,
4 469.451, 469.453, 469.455, 469.457, 469.459, 469.461, 469.463, 469.465, and 469.467,
5 RSMo, are repealed and forty-eight new sections enacted in lieu thereof, to be known as
6 sections 214.330, 469.399, 469.401, 469.402, 469.403, 469.404, 469.405, 469.413, 469.415,
7 469.417, 469.419, 469.421, 469.423, 469.425, 469.427, 469.429, 469.431, 469.432, 469.433,
8 469.435, 469.437, 469.439, 469.441, 469.443, 469.445, 469.447, 469.449, 469.450, 469.451,
9 469.453, 469.455, 469.456, 469.457, 469.459, 469.462, 469.463, 469.464, 469.465, 469.467,
10 469.471, 469.473, 469.475, 469.477, 469.479, 469.481, 469.483, 469.485, and 469.487, to
11 read as follows:
214.330. 1. (1) The endowed care trust fund required by sections 214.270 to 214.410
2 shall be permanently set aside in trust or in accordance with the provisions of subsection 2 of
3 this section. The trustee of the endowed care trust shall be a state or federally chartered
4 financial institution authorized to exercise trust powers in Missouri. The contact information
EXPLANA TION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is
intended to be omitted from the law . Matter in bold-face type in the above bill is proposed language.
5 for a trust officer or duly appointed representative of the trustee with knowledge and access to
6 the trust fund accounting and trust fund records must be disclosed to the of fice or its duly
7 authorized representative upon request.
8 (2) The trust fund records, including all trust fund accounting records, shall be
9 maintained in the state of Missouri at all times or shall be electronically stored so that the
10 records may be made available in the state of Missouri within fifteen business days of receipt
11 of a written request. The operator of an endowed care cemetery shall maintain a current name
12 and address of the trustee and the records custodian for the endowed care trust fund and shall
13 supply such information to the of fice, or its representative, upon request.
14 (3) Missouri law shall control all endowed care trust funds and the Missouri courts
15 shall have jurisdiction over endowed care trusts regardless of where records may be kept or
16 various administrative tasks may be performed.
17 2. An endowed care trust fund shall be administered in accordance with Missouri law
18 governing trusts, including but not limited to the applicable provisions of chapters 456 and
19 469, except as specifically provided in this subsection or where the provisions of sections
20 214.270 to 214.410 provide dif ferently , provided that a cemetery operator shall not in any
21 circumstances be authorized to restrict, enlar ge, change, or modify the requirements of this
22 section or the provisions of chapters 456 and 469 by agreement or otherwise.
23 (1) Income and principal of an endowed care trust fund shall be determined under the
24 provisions of law applicable to trusts, except that the [provisions of section 469.405 shall not
25 apply] trustee shall have:
26 (a) No power of adjustment under section 469.405;
27 (b) No power of conversion either fr om an income trust to a unitrust or fro m a
28 unitrust to an income trust under section 469.475;
29 (c) No power or discr etion to determine or modify the unitrust rate, as
30 established in the terms of the endowed care trust agr eement; and
31 (d) No discret ion to determine applicable value for purposes of computing the
32 unitrust amount beyond that granted by law and exerc ised solely for rea sons of
33 administrative convenience and not to affect the size of distributions .
34
35 In determining applicable value under section 469.473, values over a thr ee-year period
36 if available, or the duration of the trust if shorter , shall be used.
37 (2) No principal shall be distributed from an endowed care trust fund except to the
38 extent that a unitrust [election is in ef fect with respect to such trust under the provisions of
39 section 469.41 1] amount is re quir ed by the terms of the endowed car e trust fund
40 agr eement under subdivision (6) of this subsection .
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41 (3) No right to transfer jurisdiction from Missouri under section 456.1-108 shall exist
42 for endowed care trusts.
43 (4) All endowed care trusts shall be irrevocable.
44 (5) No trustee shall have the power to terminate an endowed care trust fund under the
45 provisions of section 456.4-414.
46 (6) A unitrust [election made in accordance with the provisions of chapter 469 shall
47 be made by the cemetery operator in the terms of the endowed care trust fund agreement
48 itself, not by the trustee] definition of income under sections 469.471 to 469.487 shall be
49 established by the cemetery operator in the terms of the endowed care trust fund
50 agr eement itself, not by the trustee, and shall not pr ovide for a unitrust rate exceeding
51 five per cent per annum. The unitrust rate shall be changed only by amendment to the
52 agr eement as pr ovided in this section .
53 (7) No contract of insurance shall be deemed a suitable investment for an endowed
54 care trust fund.
55 (8) The income from the endowed care fund may be distributed to the cemetery
56 operator at least annually on a date designated by the cemetery operator by recor d , but no
57 later than sixty days following the end of the [ trust fund ] trust's fiscal year . Any income not
58 distributed within sixty days following the end of the trust's fiscal year shall be added to and
59 held as part of the principal of the trust fund. The cemetery operator may instruct by
60 r ecord the trustee to distribute less than all the income distributable for the year if the
61 cemetery operator determines that the money is not needed.
62 3. The cemetery operator shall have the duty and responsibility to apply the income
63 distributed to provide care and maintenance only for that part of the cemetery designated as
64 an endowed care section and not for any other purpose.
65 4. In addition to any other duty , obligation, or requirement imposed by sections
66 214.270 to 214.410 or the endowed care trust agreement, the trustee's duties shall be the
67 maintenance of records related to the trust and the accounting for and investment of moneys
68 deposited by the operator to the endowed care trust fund.
69 (1) For the purposes of sections 214.270 to 214.410, the trustee shall not be deemed
70 responsible for the care, the maintenance, or the operation of the cemetery , or for any other
71 matter relating to the cemetery , or the proper expenditure of funds distributed by the trustee to
72 the cemetery operator , including, but not limited to, compliance with environmental laws and
73 regulations.
74 (2) W ith respect to cemetery property maintained by endowed care funds, the
75 cemetery operator shall be responsible for the performance of the care and maintenance of the
76 cemetery property .
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77 5. If the endowed care cemetery fund is not permanently set aside in a trust fund as
78 required by subsection 1 of this section, then the funds shall be permanently set aside in an
79 escrow account in the state of Missouri. Funds in an escrow account shall be placed in an
80 endowed care trust fund under subsection 1 if the funds in the escrow account exceed three
81 hundred fifty thousand dollars, unless otherwise approved by the division for good cause.
82 The account shall be insured by the Federal Deposit Insurance Corporation or comparable
83 deposit insurance and held in a state or federally chartered financial institution authorized to
84 do business in Missouri and located in this state.
85 (1) The interest from the escrow account may be distributed to the cemetery operator
86 at least in annual or semiannual installments, but not later than six months following the
87 calendar year . Any interest not distributed within six months following the end of the
88 calendar year shall be added to and held as part of the principal of the account.
89 (2) The cemetery operator shall have the duty and responsibility to apply the interest
90 to provide care and maintenance only for that part of the cemetery in which burial space shall
91 have been sold and with respect to which sales the escrow account shall have been established
92 and not for any other purpose. The principal of such funds shall be kept intact. The cemetery
93 operator's duties shall be the maintenance of records and the accounting for an investment of
94 moneys deposited by the operator to the escrow account. For purposes of sections 214.270 to
95 214.410, the administrator of the of fice of endowed care cemeteries shall not be deemed to be
96 responsible for the care, maintenance, or operation of the cemetery . W ith respect to cemetery
97 property maintained by cemetery care funds, the cemetery operator shall be responsible for
98 the performance of the care and maintenance of the cemetery property owned by the cemetery
99 operator .
100 (3) The division may approve an escrow agent if the escrow agent demonstrates the
101 knowledge, skill, and ability to handle escrow funds and financial transactions and is of good
102 moral character .
103 6. The cemetery operator shall be accountable to the owners of burial space in the
104 cemetery for compliance with sections 214.270 to 214.410.
105 7. Excluding funds held in an escrow account, all endowed care trust funds shall be
106 administered in accordance with an endowed care trust fund agreement, which shall be
107 submitted to the of fice by the cemetery operator for review and approval. The endowed care
108 cemetery shall be notified in writing by the of fice of endowed care cemeteries regarding the
109 approval or disapproval of the endowed care trust fund agreement and regarding any changes
110 required to be made for compliance with sections 214.270 to 214.410 and the rules and
111 regulations promulgated thereunder .
112 8. All endowed care cemeteries shall be under a continuing duty to file with the of fice
113 of endowed care cemeteries and to submit for prior approval any and all changes,
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114 amendments, or revisions of the endowed care trust fund agreement at least thirty days before
115 the ef fective date of such change, amendment, or revision.
116 9. If the endowed care trust fund agreement, or any changes, amendments, or
117 revisions filed with the of fice, are not disapproved by the of fice within thirty days after
118 submission by the cemetery operator , the endowed care trust fund agreement, or the related
119 change, amendment, or revision, shall be deemed approved and may be used by the cemetery
120 operator and the trustee. Notwithstanding any other provision of this section, the of fice may
121 review and disapprove an endowed care trust fund agreement, or any submitted change,
122 amendment, or revision, after the thirty days provided herein or at any other time if the
123 agreement is not in compliance with sections 214.270 to 214.410 or the rules promulgated
124 thereunder . Notice of disapproval by the of fice shall be in writing and delivered to the
125 cemetery operator and the trustee within ten days of disapproval.
126 10. Funds in an endowed care trust fund or escrow account may be commingled with
127 endowed care funds for other endowed care cemeteries, provided that the cemetery operator
128 and the trustee shall maintain adequate accounting records of the disbursements,
1 2 9 contributions, and income allocated for each cemetery .
130 1 1. By accepting the trusteeship of an endowed care trust or accepting funds as an
131 escrow agent pursuant to sections 214.270 to 214.410, the trustee or escrow agent submits
132 personally to the jurisdiction of the courts of this state and the of fice of endowed care
133 cemeteries regarding the administration of the trust or escrow account. A trustee or escrow
134 agent shall consent in writing to the jurisdiction of the state of Missouri and the of fice in
135 regards to the trusteeship or the operation of the escrow account and to the appointment of the
136 of fice of secretary of state as its agent for service of process regarding any administrative or
137 legal actions relating to the trust or the escrow account, if it has no designated agent for
138 service of process located in this state. Such consent shall be filed with the of fice prior to
139 accepting funds pursuant to sections 214.270 to 214.410 as trustee or as an escrow agent on a
140 form provided by the of fice by rule.
469.399. Sections 469.399 to 469.487 shall be known and may be cited as the
2 "Missouri Uniform Fiduciary Income and Principal Act".
469.401. As used in sections [ 469.401 ] 469.399 to [ 469.467 ] 469.487 , the following
2 terms mean:
3 (1) "Accounting period", a calendar year unless [ another twelve-month period is
4 selected by ] a fiduciary selects another period of twelve calendar months or
5 appr oximately twelve calendar months . The term includes a [ portion ] part of a
6 calendar year or [ other twelve-month ] another period [ that ] of twelve calendar months or
7 appr oximately twelve calendar months that begins when an income interest begins or ends
8 when an income interest ends;
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9 (2) "Asset-backed security", a security that is serviced primarily by the cash
10 flows of a discret e pool of fixed or revo lving receivables or other financial assets that by
11 their terms convert into cash within a finite time. The term includes rights or other
12 assets that ensur e the servicing or timely distribution of pr oceeds to the holder of the
13 asset-backed security . The term does not include an asset to which section 469.423,
14 469.437, or 469.447 applies;
15 (3) "Beneficiary", includes:
16 (a) For a trust:
17 a. A curr ent beneficiary , including a curr ent income beneficiary and a
18 beneficiary that may r eceive only principal;
19 b. A r emainder beneficiary; and
20 c. Any other successor beneficiary;
21 (b) For an estate, an heir , legatee , and devisee [ of a decedent's estate, and an income
22 beneficiary and a remainder beneficiary of a trust, including any type of entity that has a
23 beneficial interest in either an estate or a trust ]; and
24 (c) For a life estate or term inter est, a person that holds a life estate, term
25 inter est, or re mainder or other inter est following a life estate or term interes t;
26 (4) "Court", any court in this state having jurisdiction r elating to a trust, estate,
27 life estate, or other term inter est described in subdivision (2) of subsection 1 of section
28 469.402;
29 (5) "Current income beneficiary", a beneficiary to which a fiduciary may
30 distribute net income, whether or not the fiduciary also may distribute principal to the
31 beneficiary;
32 (6) "Distribution", a payment or transfer by a fiduciary to a beneficiary in the
33 beneficiary’ s capacity as a beneficiary , made under the terms of the trust, without
34 consideration other than the beneficiary’ s right to receiv e the payment or transfer
35 under the terms of the trust. "Distribute", "distributed", and "distributee" have
36 corr esponding meanings;
37 (7) "Estate", a decedent’ s estate. The term includes the prop erty of the decedent
38 as the estate is originally constituted and the prop erty of the estate as it exists at any
39 time during administration;
40 [ (3) ] (8) "Fiduciary", includes a trustee, trust pro tector determined under section
41 456.8-808, personal representative, [ trustee, executor , administrator , successor personal
42 representative, special administrator and any other person performing substantially the same
43 function ] life tenant, holder of a term intere st, and person acting under a delegation
44 fr om a fiduciary . The term includes a person that holds pro perty for a successor
45 beneficiary whose interes t may be affected by an allocation of re ceipts and expenditures
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46 between income and principal. If ther e ar e two or mor e co-fiduciaries, the term
47 includes all co-fiduciaries acting under the terms of the trust and applicable law ;
48 [ (4) ] (9) "Income", money or other property [ that ] a fiduciary receives as current
49 return from [ a ] principal [ asset, including a portion ] . The term includes a part of receipts
50 from a sale, exchange , or liquidation of a principal asset, [ as ] to the extent provided in
51 sections 469.423 to [ 469.449 ] 469.450 ;
52 [ (5) "Income beneficiary", a person to whom net income of a trust is or may be
53 payable;
54 (6) ] (10) "Income interest", the right of [ an ] a curr ent income beneficiary to receive
55 all or part of net income, whether the terms of the trust require [ it ] the net income to be
56 distributed or authorize [ it ] the net income to be distributed in the [ trustee's ] fiduciary's
57 discretion . The term includes the right of a curren t beneficiary to use pr operty held by a
58 fiduciary ;
59 (1 1) "Independent person", a person that is not:
60 (a) For a trust:
61 a. A qualified beneficiary as defined under section 456.1-103;
62 b. A settlor of the trust; or
63 c. An individual whose legal obligation to support a beneficiary may be satisfied
64 by a distribution fr om the trust;
65 (b) For an estate, a beneficiary;
66 (c) A spouse, par ent, br other , sister , or issue of an individual described in
67 paragraph (a) or (b) of this subdivision;
68 (d) A corporation, partnership, limited liability company , or other entity in
69 which persons described in paragraphs (a) to (c) of this subdivision, in the aggr egate,
70 have voting control; or
71 (e) An employee of a person described in paragraph (a), (b), (c), or (d) of this
72 subdivision;
73 [ (7) ] (12) "Mandatory income interest", the right of [ an ] a curr ent income
74 beneficiary to receive net income that the terms of the trust require the fiduciary to distribute;
75 [ (8) ] (13) "Net income", [ if section 469.41 1 applies to the trust, the unitrust amount,
76 or if section 469.41 1 does not apply to the trust, ] the total [ receipts allocated to income ]
77 allocations during an accounting period to income under the terms of a trust and sections
78 469.399 to 469.487 minus the disbursements [ made from income during the same period, plus
79 or minus transfers pursuant to sections 469.401 to 469.467 to or from income during the same
80 period ] during the period, other than distributions, allocated to income under the terms
81 of the trust and sections 469.399 to 469.487. T o the extent the trust is a unitrust under
82 sections 469.471 to 469.487, "net income" means the unitrust amount determined
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83 ther eunder . "Net income" includes an adjustment fro m principal to income under
84 section 469.405. The term does not include an adjustment from income to principal
85 under section 469.405 ;
86 [ (9) ] (14) "Person", an individual, [ corporation, business trust, ] estate, trust,
87 [ partnership, limited liability company , association, joint venture ] business or nonpr ofit
88 entity , public corporation , government[ , ] or governmental subdivision, agency , or
89 instrumentality , [ public corporation ] or [ any ] other legal [ or commercial ] entity;
90 (15) "Personal r epresent ative", an executor , administrator , successor personal
91 r epresent ative, special administrator , or person that performs substantially the same
92 function with res pect to an estate under the law governing the person’ s status;
93 [ (10) ] (16) "Principal", property held in trust for distribution to [ a remainder ] ,
94 pr oduction of income for , or use by a curr ent or successor beneficiary [ when the trust
95 terminates ];
96 [ (1 1) "Qualified beneficiary", a beneficiary defined in section 456.1-103;
97 (12) "Remainder beneficiary", a person entitled to receive principal when an income
98 interest ends;
99 (13) ] (17) "Record", information that is inscribed on a tangible medium or that
100 is stored in an electr onic or other medium and is ret rievable in per ceivable form;
101 (18) "Settlor", a person, including a testator , that crea tes or contributes
102 pr operty to a trust. If mor e than one person creat es or contributes prop erty to a trust,
103 the term includes each person, to the extent of the trust pr operty attributable to that
104 person’ s contribution, except to the extent another person has the power to r evoke or
105 withdraw that portion;
106 (19) "Special tax benefit":
107 (a) Exclusion of a transfer to a trust fr om gifts described in 26 U.S.C. Section
108 2503(b), as amended, because of the qualification of an income interes t in the trust as a
109 pr esent interes t in pro perty;
110 (b) Status as a qualified subchapter S trust described in 26 U.S.C. Section 1361
111 (d)(3), as amended, at a time the trust holds stock of an S corporation described in 26
112 U.S.C. Section 1361(a)(1), as amended;
113 (c) An estate or gift tax marital deduction for a transfer to a trust under 26
114 U.S.C. Section 2056 or 2523, as amended, which depends or depended in whole or in
115 part on the right of the settlor ’ s spouse to recei ve the net income of the trust;
116 (d) Exemption in whole or in part of a trust fro m the federal generation-skipping
117 transfer tax imposed by 26 U.S.C. Section 2601, as amended, because the trust was
118 irr evocable on September 25, 1985, if ther e is any possibility that:
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119 a. A taxable distribution, as defined in 26 U.S.C. Section 2612(b), as amended,
120 could be made fr om the trust; or
121 b. A taxable termination, as defined in 26 U.S.C. Section 2612(a), as amended,
122 could occur with res pect to the trust; or
123 (e) An inclusion ratio, as defined in 26 U.S.C. Section 2642(a), as amended, of the
124 trust which is less than one, if ther e is any possibility that:
125 a. A taxable distribution, as defined in 26 U.S.C. Section 2612(b), as amended,
126 could be made fr om the trust; or
127 b. A taxable termination, as defined in 26 U.S.C. Section 2612(a), as amended,
128 could occur with res pect to the trust;
129 (20) "Successive interes t", the interes t of a successor beneficiary;
130 (21) "Successor beneficiary", a person entitled to re ceive income or principal or
131 to use pr operty when an income inter est or other curre nt interes t ends;
132 (22) "T erms of a trust" :
133 (a) Except as otherwise provi ded in paragraph (b) of this subdivision , the
134 manifestation of the settlor's [ or decedent's ] intent r egarding a trust's pr ovisions as:
135 a. Expressed in [ a manner which is ] the trust instrument; or
136 b. Established by other evidence that would be admissible [ as proof ] in a judicial
137 proceeding[ , whether by written or spoken words or by conduct ] ;
138 (b) The trust's provi sions as established, determined, or amended by:
139 a. A trustee or trust dir ector in accordance with applicable law;
140 b. Court order; or
141 c. A nonjudicial settlement agr eement under section 456.1-1 1 1;
142 (c) For an estate, a will; or
143 (d) For a life estate or term interes t, the corr esponding manifestation of the
144 rights of the beneficiaries;
145 (23) "T rust":
146 (a) Includes:
147 a. An express trust, private or charitable, with additions to the trust, wher ever
148 and however cr eated; and
149 b. A trust creat ed or determined by judgment or decr ee under which the trust is
150 to be administer ed in the manner of an expr ess trust; and
151 (b) Does not include:
152 a. A constructive trust;
153 b. A r esulting trust, conservatorship, guardianship, multi-party account,
154 custodial arrangement for a minor , business trust, voting trust, security arrangement,
155 liquidation trust, or trust for the primary purpose of paying debts, dividends, inter est,
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156 salaries, wages, pr ofits, pensions, ret irem ent benefits, or employee benefits of any kind;
157 or
158 c. An arrangement under which a person is a nominee, escr owee, or agent for
159 another ;
160 [ (14) ] (24) "T rustee", a person, other than a personal rep res entative, that owns or
161 holds pr operty for the benefit of a beneficiary . The term includes an original, additional ,
162 or successor trustee, whether or not appointed or confirmed by a court;
163 [ (15) "Unitrust amount", net income as defined by section 469.41 1]
164 (25) "W ill", any testamentary instrument recog nized by applicable law that
165 makes a legally effective disposition of an individual's prop erty , effective at the
166 individual's death. The term includes a codicil or other amendment to a testamentary
167 instrument .
469.402. [ The provisions of sections 456.3-301 to 456.3-305 shall apply to sections
2 469.401 to 469.467 for all purposes. ] 1. Except as otherwise pr ovided in the terms of a
3 trust or sections 469.399 to 469.487, sections 469.399 to 469.487 apply to:
4 (1) A trust or estate; and
5 (2) A life estate or other term interes t in which the inter est of one or mor e
6 persons will be succeeded by the inter est of one or mor e other persons.
7 2. Except as otherwise provi ded in the terms of a trust or sections 469.399 to
8 469.487, sections 469.399 to 469.487 apply when this state is the principal place of
9 administration of a trust or estate or the situs of pr operty that is not held in a trust or
10 estate and is subject to a life estate or other term inter est described in subdivision (2) of
11 subsection 1 of this section. By accepting the trusteeship of a trust having its principal
12 place of administration in this state or by moving the principal place of administration
13 of a trust to this state, the trustee submits to the application of sections 469.399 to
14 469.487 to any matter within the scope of sections 469.399 to 469.487 involving the trust.
469.403. 1. [ In allocating receipts and disbursements to or between principal and
2 income, and with respect to any matter within the scope of ] In making an allocation or
3 determination or exer cising discr etion under sections 469.413 to 469.421, a fiduciary
4 shall :
5 (1) [ Shall ] Act in good faith, based on what is fair and r easonable to all
6 beneficiaries;
7 (2) Administer a trust or estate [ under ] impartially , except to the extent the terms of
8 the trust manifest an intent that the fiduciary shall or [ the will ] may favor one or mor e
9 beneficiaries;
10 (3) Administer the trust or estate in accordance with the terms of the trust , even
11 if there is a dif ferent provision in sections [ 469.401 ] 469.399 to [ 469.467 ] 469.487 ; and
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12 [ (2) May] (4) Administer [ a ] the trust or estate [ by exercising ] in accordance with
13 sections 469.399 to 469.487, except to the extent the terms of the trust provi de otherwise
14 or authorize the fiduciary to determine otherwise.
15 2. A fiduciary's allocation, determination, or exer cise of discr etion under
16 sections 469.399 to 409.487 is presum ed to be fair and r easonable to all beneficiaries. A
17 fiduciary may exerci se a discretionary power of administration given to the fiduciary by the
18 terms of the trust [ or the will, even if the ] , and an exercise of the power that produces a result
19 dif ferent from a result required or permitted by sections [ 469.401 ] 469.399 to [469.467;]
20 469.487 does not crea te an inference that the fiduciary abused the fiduciary's discr etion.
21 [ (3) Shall administer a trust or estate pursuant]
22 3. A fiduciary shall:
23 (1) Add a receipt to [ sections 469.401 to 469.467 if ] principal, to the extent neither
24 the terms of the trust [ or the will do not contain a dif ferent provision or do not give ] nor
25 sections 469.399 to 469.487 allocate the [ fiduciary a discretionary power of administration ]
26 r eceipt between income and principal ; and
27 [ (4) Shall add a receipt or ] (2) Char ge a disbursement to principal , to the extent [that
28 the terms of the trust and sections 469.401 to 469.467 do not provide a rule for allocating the
29 receipt or disbursement to or between principal and income.
30 2. In exercising the power to adjust pursuant to section 469.405 or a discretionary
31 power of administration regarding a matter within the scope of sections 469.401 to 469.467,
32 whether granted by the terms of a trust, a will, or sections 469.401 to 469.467, a fiduciary
33 shall administer a trust or estate impartially , based on what is fair and reasonable to all of the
34 beneficiaries, except to the extent that the terms of the trust or the will clearly manifest an
35 intent that the fiduciary shall or may favor one or more of the beneficiaries. A determination
36 in accordance with sections 469.401 to 469.467 is presumed to be fair and reasonable to all of
37 the beneficiaries] neither the terms of the trust nor sections 469.399 to 469.487 allocate
38 the disbursement between income and principal .
39 4. A fiduciary may exer cise the power to adjust under section 469.405, convert
40 an income trust to a unitrust under subdivision (1) of subsection 1 of section 469.475,
41 change the per centage or method used to calculate a unitrust amount under subdivision
42 (2) of subsection 1 of section 469.475, or convert a unitrust to an income trust under
43 subdivision (3) of subsection 1 of section 469.475, if the fiduciary determines the exer cise
44 of the power will assist the fiduciary to administer the trust or estate impartially .
45 5. Factors the fiduciary shall consider in making the determination under
46 subsection 4 of this section include:
47 (1) The terms of the trust;
48 (2) The natur e, distribution standards, and expected duration of the trust;
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49 (3) The effect of the allocation rules, including specific adjustments between
50 income and principal, under sections 407.413 to 407.461;
51 (4) The desirability of liquidity and regul arity of income;
52 (5) The desirability of the pr eservation and appr eciation of principal;
53 (6) The extent to which an asset is used or may be used by a beneficiary;
54 (7) The incr ease or decr ease in the value of principal assets, reas onably
55 determined by the fiduciary;
56 (8) Whether and to what extent the terms of the trust give the fiduciary power to
57 accumulate income or invade principal or pr ohibit the fiduciary fro m accumulating
58 income or invading principal;
59 (9) The extent to which the fiduciary has accumulated income or invaded
60 principal in preced ing accounting periods;
61 (10) The effect of curren t and reas onably expected economic conditions; and
62 (1 1) The r easonably expected tax consequences of the exer cise of the power .
469.404. 1. In this section, "fiduciary decision" means:
2 (1) A fiduciary’ s allocation between income and principal or other
3 determination regard ing income and principal req uired or authorized by the terms of
4 the trust or sections 469.399 to 469.487;
5 (2) The fiduciary’ s exer cise or nonexer cise of a discr etionary power r egarding
6 income and principal granted by the terms of the trust or sections 469.399 to 469.487,
7 including the power to adjust under section 469.405, convert an income trust to a
8 unitrust under subdivision (1) of subsection 1 of section 469.475, change the per centage
9 or method used to calculate a unitrust amount under subdivision (2) of subsection 1 of
10 section 469.475, or convert a unitrust to an income trust under subdivision (3) of
11 subsection 1 section 469.475; or
12 (3) The fiduciary’ s implementation of a decision described in subdivision (1) or
13 (2) of this subsection.
14 2. The court shall not order a fiduciary to change a fiduciary decision unless the
15 court determines that the fiduciary decision was an abuse of the fiduciary’ s discr etion.
16 3. If the court determines that a fiduciary decision was an abuse of the
17 fiduciary’ s discr etion, the court may order a rem edy authorized by law , including under
18 section 456.10-1001. T o place the beneficiaries in the positions the beneficiaries would
19 have occupied if ther e had not been an abuse of the fiduciary’ s discret ion, the court may
20 order:
21 (1) The fiduciary to exer cise or ref rain fro m exer cising the power to adjust
22 under section 469.405;
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23 (2) The fiduciary to exercise or r efrain fr om exerci sing the power to convert an
24 income trust to a unitrust under subdivision (1) of subsection 1 of section 469.475,
25 change the per centage or method used to calculate a unitrust amount under subdivision
26 (2) of subsection 1 of section 469.475, or convert a unitrust to an income trust under
27 subdivision (3) of subsection 1 of section 469.475;
28 (3) The fiduciary to distribute an amount to a beneficiary;
29 (4) A beneficiary to ret urn some or all of a distribution; or
30 (5) The fiduciary to withhold an amount fr om one or mor e future distributions
31 to a beneficiary .
32 4. On petition by a fiduciary for instruction, the court may determine whether a
33 pr oposed fiduciary decision will res ult in an abuse of the fiduciary’ s discret ion. If the
34 petition describes the pr oposed decision, contains sufficient information to inform the
35 beneficiary of the reas ons for making the pr oposed decision and the facts on which the
36 fiduciary relies, and explains how the beneficiary will be affected by the pro posed
37 decision, a beneficiary that opposes the prop osed decision has the burden to establish
38 that it will res ult in an abuse of the fiduciary’ s discr etion.
469.405. 1. [ A trustee may adjust between principal and income to the extent the
2 trustee considers necessary if the trustee invests and manages trust assets as a prudent
3 investor , the terms of the trust describe the amount that may or shall be distributed to a
4 beneficiary by referring to the trust's income, and the trustee determines, after applying
5 subsection 1 of section 469.403, that the trustee is unable to comply with subsection 2 of
6 section 469.403. ] Except as otherwise pr ovided in the terms of a trust or this section, a
7 fiduciary , in a record , without court appr oval, may adjust between income and principal
8 if the fiduciary determines the exer cise of the power to adjust will assist the fiduciary to
9 administer the trust or estate impartially .
10 2. This section does not crea te a duty to exer cise or consider the power to adjust
11 under subsection 1 of this section or to inform a beneficiary about the applicability of
12 this section.
13 3. A fiduciary that in good faith exercises or fails to exer cise the power to adjust
14 under subsection 1 of this section is not liable to a person affected by the exer cise or
15 failur e to exerci se.
16 [ 2. ] 4. In deciding whether and to what extent to exercise the power [ conferred by ] to
17 adjust under subsection 1 of this section, a [ trustee ] fiduciary shall consider all factors the
18 fiduciary considers relevant [ to the trust and its beneficiaries ], including [ the following ]
19 r elevant factors [to the extent relevant:
20 (1) The nature, purpose and expected duration of the trust;
21 (2) The intent of the settlor;
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22 (3) The identity and circumstances of the beneficiaries;
23 (4) The needs for liquidity , regularity of income, and preservation and appreciation of
24 capital;
25 (5) The assets held in the trust, including the extent to which such assets consist of
26 financial assets, interests in closely held enterprises, tangible and intangible personal
27 property , or real property , and the extent to which such assets are used by a beneficiary , and
28 whether such assets were purchased by the trustee or received from the settlor;
29 (6) The net amount allocated to income pursuant to sections 469.401 to 469.467,
30 other than this section, and the increase or decrease in the value of the principal assets, which
31 the trustee may estimate as to assets for which market values are not readily available;
32 (7) Whether and to what extent the terms of the trust give the trustee the power to
33 invade principal or accumulate income, or prohibit the trustee from invading principal or
34 accumulating income, and the extent to which the trustee has exercised a power from time to
35 time to invade principal or accumulate income;
36 (8) The actual and anticipated ef fect of economic conditions on principal and income
37 and ef fects of inflation and deflation; and
38 (9) The anticipated tax consequences of an adjustment] in subsection 5 of section
39 469.403 and the application of sections 469.423, 469.435, and 469.445 .
40 [ 3. ] 5. A [ trustee may ] fiduciary shall not exerci se the power under subsection 1 of
41 this section to make an adjustment or under section 469.435 to make a determination that
42 an allocation is insubstantial if :
43 (1) [That diminishes the income interest in a trust which requires all of the income to
44 be paid at least annually to a spouse and for which an estate tax or gift tax marital deduction
45 would be allowed, in whole or in part, if the trustee did not have the power to make the
46 adjustment;
47 (2) That reduces the actuarial value of the income interest in a trust to which a person
48 transfers property with the intent to qualify for a gift tax exclusion;
49 (3) That changes] The adjustment or determination would redu ce the amount
50 payable to a [ beneficiary ] curr ent income beneficiary fr om a trust that qualifies for a
51 special tax benefit, except to the extent the adjustment is made to pro vide for a
52 r easonable apportionment of the total ret urn of the trust between the curr ent income
53 beneficiary and successor beneficiaries;
54 (2) The adjustment or determination would change the amount payable to a
55 beneficiary , as a fixed annuity or a fixed fraction of the value of the trust assets , under the
56 terms of the trust ;
57 [ (4) From any] (3) The adjustment or determination would r educe an amount that
58 is permanently set aside for a charitable [ purposes ] purpose under [ a will or ] the terms of [ a ]
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59 the trust [ to the extent that the existence of the power to adjust would change the character of
60 the amount ] , unless both income and principal are set aside for [ federal income, gift or
61 estate tax purposes ] the charitable purpose ;
62 [ (5) If ] (4) Possessing or exercising the power [ to make an adjustment causes an
63 individual ] would cause a person to be treated as the owner of all or part of the trust for
64 [ income tax purposes, and the individual would not be treated as the owner if the trustee did
65 not possess the power to make an adjustment ] federal income tax purposes ;
66 [ (6) If ] (5) Possessing or exercising the power [ to make an adjustment causes ] would
67 cause all or part of the value of the trust assets to be included [ for estate tax purposes ] in the
68 gr oss estate of an individual [ who has ] for federal estate tax purposes;
69 (6) Possessing or exer cising the power [ to remove or appoint a trustee, or both, ]
70 would cause an individual to be tr eated as making a gift for federal gift tax purposes;
71 (7) The fiduciary is not an independent person;
72 (8) The trust is irr evocable and [ the assets would not be included in the estate of the
73 individual if the trustee did not possess ] prov ides for income to be paid to the settlor and
74 possessing or exercising the power [ to make an adjustment ] would cause the adjusted
75 principal or income to be consider ed an available res ource or available income under a
76 public-benefit prog ram ; or
77 [ (7) If the trustee is a beneficiary of the trust; or
78 (8) If the trustee is not a beneficiary , but the adjustment would benefit the trustee
79 directly or indirectly]
80 (9) The trust is a unitrust under sections 469.471 to 469.487 .
81 [ 4. ] 6. If [ subdivision (5), (6), (7) or (8) of ] subsection [ 3 ] 5 of this section applies to a
82 [ trustee and there is more than one trustee, a cotrustee to whom the provision does ] fiduciary:
83 (1) A co-fiduciary to which subdivisions (4) to (7) of subsection 5 of this section
84 do not apply may [ make ] exer cise the [ adjustment ] power to adjust unless the exercise of the
85 power by the remaining [ trustee or trustees ] co-fiduciary or co-fiduciaries is not permitted
86 by the terms of the trust or law other than sections 469.399 to 469.487; and
87 (2) If ther e is no co-fiduciary to which subdivisions (4) to (7) of subsection 5 of
88 this section do not apply , the fiduciary may appoint a co-fiduciary to which subdivisions
89 (4) to (7) of subsection 5 of this section do not apply , which may be a special fiduciary
90 with limited powers, and the appointed co-fiduciary may exerci se the power to adjust
91 under subsection 1 of this section, unless the appointment of a co-fiduciary or the
92 exer cise of the power by a co-fiduciary is not permitted by the terms of the trust or law
93 other than under sections 469.399 to 469.487 .
94 [ 5. ] 7. A [ trustee ] fiduciary may release [ the entire power conferred by subsection 1
95 of this section, or may release only the power to adjust from income to principal or the power
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96 to adjust from principal to income if the trustee is uncertain about whether possessing or
97 exercising the power will ] or delegate to a co-fiduciary the power to adjust under
98 subsection 1 of this section if the fiduciary determines that the fiduciary's possession or
99 exer cise of the power will or may:
100 (1) Cause a result described in subdivisions (1) to (6) or subdivision (8) of subsection
101 [ 3 ] 5 of this section [ , ] ; or [ if the trustee determines that possessing or exercising the power
102 will or may ]
103 (2) Deprive the trust of a tax benefit or impose a tax burden not described in
104 subdivisions (1) to (6) of subsection [ 3 ] 5 of this section.
105 8. A fiduciary's release or delegation to a co-fiduciary under subsection 7 of this
106 section of the power to adjust under subsection 1 of this section:
107 (1) Shall be in a record;
108 (2) Applies to the entire power , unless the release or delegation pr ovides a
109 limitation, which may be a limitation to the power to adjust:
110 (a) Fr om income to principal;
111 (b) Fr om principal to income;
112 (c) For specified prop erty; or
113 (d) In specified circu mstances;
114 (3) For a delegation, may be modified by a r e-delegation under this subsection
115 by the co-fiduciary to which the delegation is made; and
116 (4) Subject to subdivision (3) of this subsection, is [ may be ] permanent [ or for ]
117 unless the re lease or delegation pr ovides a specified period, including a period measured by
118 the life of an individual or the lives of mor e than one individual .
119 [ 6. ] 9. T erms of a trust that deny or limit the power [ of a trustee ] to [ make an
120 adjustment ] adjust between income and principal [ and income ] do not af fect the application
121 of this section unless [ it is clear from ] the terms of the trust [ that the terms are intended to ]
122 expr essly deny [ the trustee ] or limit the power [ of adjustment conferred by ] to adjust under
123 subsection 1 of this section.
124 10. The exercise of the power to adjust under subsection 1 of this section in any
125 accounting period may apply to the curr ent period, the immediately pr eceding period,
126 and one or mor e subsequent periods.
127 1 1. A description of the exerci se of the power to adjust under subsection 1 of this
128 section shall be:
129 (1) Included in a rep ort, if any , sent to beneficiaries under subsection 3 of section
130 456.8-813; or
131 (2) Communicated at least annually to the qualified beneficiaries defined under
132 section 456.1-103 other than all beneficiaries that receiv e or are entitled to re ceive
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133 income fr om the trust or would be entitled to r eceive a distribution of principal if the
134 trust wer e terminated at the time the notice is sent, assuming no power of appointment
135 is exerci sed.
469.413. [ After a decedent dies, in the case ] 1. This section applies when:
2 (1) The death of an individual res ults in the crea tion of an estate[ , or after ] or
3 trust; or
4 (2) An income interest in a trust [ ends, the following rules apply: ] terminates,
5 whether the trust continues or is distributed.
6 [ (1) ] 2. A fiduciary of an estate or [ of a terminating ] trust with an income interest
7 that terminates shall determine , under subsection 7 of this section and sections 469.417 to
8 469.462, the amount of net income and net principal receipts received from property
9 specifically given to a beneficiary [ pursuant to the rules in sections 469.417 to 469.461 which
10 apply to trustees and the rules in subdivision (5) of this section ]. The fiduciary shall distribute
11 the net income and net principal receipts to the beneficiary [ who ] that is to receive the
12 specific property[ ; ] .
13 [ (2) ] 3. A fiduciary shall determine the [ remaining ] income and net income of [ a
14 decedent's ] an estate or [ a terminating ] income interest [ pursuant to the rules in ] in a trust
15 that terminates, other than the amount of net income determined under subsection 2 of
16 this section, under sections 469.417 to [469.461 which apply to trustees] 469.462 and by:
17 [ (a) ] (1) Including in net income all income from property used or sold to dischar ge
18 liabilities;
19 [ (b) ] (2) Paying from income or principal, in the fiduciary's discretion, fees of
20 attorneys, accountants , and fiduciaries; court costs and other expenses of administration; and
21 interest on [ death ] estate and inheritance taxes and other taxes imposed because of the
22 decedent's death , but the fiduciary may pay [ those ] the expenses from income of property
23 passing to a trust for which the fiduciary claims [ an ] a federal estate tax marital or charitable
24 deduction only to the extent [ that ] :
25 (a) The payment of [ those ] the expenses from income will not cause the reduction or
26 loss of the deduction; [ and ] or
27 (b) The fiduciary makes an adjustment under subsection 2 of section 469.462;
28 and
29 [ (c) ] (3) Paying from principal [ all ] other disbursements made or incurred in
30 connection with the settlement of [ a decedent's ] the estate or the winding up of [ a
31 terminating ] an income interest[ , ] that terminates, including :
32 (a) T o the extent authorized by the decedent's will, the terms of the trust, or
33 applicable law , debts, funeral expenses, disposition of remains, family allowances, [ and
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34 death taxes ] estate and inheritance taxes, and other taxes imposed because of the
35 decedent's death; and
36 (b) Related penalties that are apportioned , by the decedent's will, the terms of the
37 trust, or applicable law , to the estate or [ terminating ] income interest [by the will, the terms
38 of the trust, or applicable law;
39 (3) A fiduciary shall distribute to a beneficiary who receives a pecuniary amount
40 outright the interest or any other amount provided by the will, the terms of the trust, or in the
41 absence of any such provisions, the provisions of section 473.633, from net income
42 determined pursuant to subdivision (2) of this section or from principal to the extent that net
43 income is insuf ficient] that terminates .
44 4. If a decedent's will, the terms of a trust, or applicable law pro vides for the
45 payment of interes t or the equivalent of interes t to a beneficiary that receives a
46 pecuniary amount outright, the fiduciary shall make the payment fr om net income
47 determined under subsection 3 of this section or fr om principal to the extent net income
48 is insufficient.
49 5. If a beneficiary is to receive a pecuniary amount outright from a trust after an
50 income interest ends because of an income beneficiary's death, and no payment of interest
51 or [ other amount ] the equivalent of interes t is provided for by the terms of the trust or
52 applicable law , the fiduciary shall [ distribute ] pay the interest or [ other amount ] the
53 equivalent of inter est to which the beneficiary would be entitled under applicable law if the
54 pecuniary amount were required to be paid under a will[ ; ] .
55 [ (4) ] 6. A fiduciary shall distribute [ the ] net income remaining after [ distributions ]
56 payments required by [ subdivision (3) ] subsections 4 and 5 of this section in the manner
57 described in section 469.415 to all other beneficiaries, including a beneficiary [ who ] that
58 receives a pecuniary amount in trust, even if the beneficiary holds an unqualified power to
59 withdraw assets from the trust or other presently exercisable general power of appointment
60 over the trust[ ; ] .
61 [ (5) ] 7. A fiduciary [ may ] shall not reduce principal or income receipts from property
62 described in [ subdivision (1) ] subsection 2 of this section because of a payment described in
63 sections 469.451 and 469.453 to the extent [ that ] the decedent's will, the terms of the trust, or
64 applicable law requires the fiduciary to make the payment from assets other than the property
65 or to the extent [ that ] the fiduciary recovers or expects to recover the payment from a third
66 party . The net income and principal receipts from the property [ are ] shall be determined by
67 including [ all of ] the amounts the fiduciary receives or pays [ with respect to ] regard ing the
68 property , whether [ those amounts ] the amount accrued or became due before, on , or after the
69 date of [ a decedent's ] the decedent's death or an income interest's terminating event, and [ by ]
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70 making a reasonable provision for [ amounts that the fiduciary believes ] an amount the estate
71 or [ terminating ] income interest may become obligated to pay after the property is distributed.
469.415. 1. [ Each ] Except to the extent sections 469.471 to 469.487 apply for a
2 beneficiary that is a trust, each beneficiary described in [ subdivision (4) ] subsection 6 of
3 section 469.413 is entitled to receive a [ portion ] share of the net income equal to the
4 beneficiary's fractional interest in undistributed principal assets, using values as of the
5 distribution date. If a fiduciary makes more than one distribution of assets to beneficiaries to
6 [ whom ] which this section applies, each beneficiary , including [ one who ] a beneficiary that
7 does not receive part of the distribution, is entitled, as of each distribution date, to a share of
8 the net income the fiduciary [ has ] received after the [ date of ] decedent's death [ or ] , an
9 income intere st's other terminating event , or [ earlier ] the pr eceding distribution [ date but
10 has not distributed as of the current distribution date ] by the fiduciary .
11 2. In determining a beneficiary's share of net income under subsection 1 of this
12 section , the following rules apply:
13 (1) The beneficiary is entitled to receive a [ portion ] share of the net income equal to
14 the beneficiary's fractional interest in the undistributed principal assets immediately before
15 the distribution date[ , including assets that later may be sold to meet principal obligations ];
16 (2) The beneficiary's fractional interest [ in the undistributed principal assets shall ]
17 under subdivision (1) of this subsection shall be calculated [without regard to property
18 specifically given to a beneficiary and property required to pay pecuniary amounts not in
19 trust;
20 (3) The beneficiary's fractional interest in the undistributed principal assets shall be
21 calculated] :
22 (a) On the [ basis of the ] aggregate value of [ those ] the assets as of the distribution
23 date without reducing the value by any unpaid principal obligation; and
24 (b) Withou t regard to:
25 a. Pr operty specifically given to a beneficiary under the decedent's will or the
26 terms of the trust; and
27 b. Pr operty r equir ed to pay pecuniary amounts not in trust; and
28 [ (4) ] (3) The distribution date [ for purposes of this section ] under subdivision (1) of
29 this subsection may be the date as of which the fiduciary calculates the value of the assets if
30 that date is reasonably near the date on which the assets are [ actually ] distributed.
31 3. [ If ] T o the extent a fiduciary does not distribute under this section all [ of ] the
32 collected but undistributed net income to each [ person ] beneficiary as of a distribution date,
33 the fiduciary shall maintain [ appropriate ] records showing the interest of each beneficiary in
34 [ that ] the net income.
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35 4. If this section applies to income fr om an asset, a fiduciary may apply the rules in
36 this section[ , to the extent that the fiduciary considers it appropriate, ] to net gain or loss
37 realized fr om the disposition of the asset after the [ date of death or ] decedent's death, an
38 income interes t's terminating event , or [ earlier ] the preced ing distribution [ date from the
39 disposition of a principal asset if this section applies to the income from the asset ] by the
40 fiduciary .
469.417. 1. An income beneficiary is entitled to net income in accordance with the
2 terms of the trust from the date [ on which the ] an income interest begins. [ An ] The income
3 interest begins on the date specified in the terms of the trust or , if no date is specified, on the
4 date an asset becomes subject to [ a trust or successive income interest ] :
5 (1) The trust for the curr ent income beneficiary; or
6 (2) A successive inter est for a successor beneficiary .
7 2. An asset becomes subject to a trust under subdivision (1) of subsection 1 of this
8 section :
9 (1) [ On the date it is transferred to the trust in the case of ] For an asset that is
10 transferred to [ a ] the trust during the [ transferor's ] settlor's life , on the date the asset is
11 transferr ed ;
12 (2) [ On the date of a testator's death in the case of ] For an asset that becomes subject
13 to [ a ] the trust [ by reason ] because of a [ will ] decedent's death, on the date of the
14 decedent's death , even if there is an intervening period of administration of the [ testator's ]
15 decedent's estate; or
16 (3) [ On the date of an individual's death in the case of ] For an asset that is transferred
17 to a fiduciary by a third party because of [ the individual's ] a decedent's death , on the date of
18 the decedent's death .
19 3. An asset becomes subject to a successive [ income ] interest under subdivision (2)
20 of subsection 1 of this section on the day after the preceding income interest ends, as
21 determined [ pursuant to ] under subsection 4 of this section, even if there is an intervening
22 period of administration to wind up the preceding income interest.
23 4. An income interest ends on the day before an income beneficiary dies or another
24 terminating event occurs[ , ] or on the last day of a period during which there is no beneficiary
25 to [ whom ] which a [ trustee ] fiduciary may or shall distribute income.
469.419. 1. A [ trustee ] fiduciary shall allocate an income receipt or disbursement ,
2 other than [ one ] a receip t to which [ subdivision (1) ] subsection 2 of section 469.413 applies ,
3 to principal if its due date occurs before [a decedent dies in the case of] the date on which:
4 (1) For an estate , the decedent died; or [ before ]
5 (2) For a trust or successive interes t, an income interest begins [ in the case of a trust
6 or successive income interest ].
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7 2. [ A trustee shall allocate an income receipt or disbursement to income if its ] If the
8 due date of a periodic income recei pt or disbursement occurs on or after the date on which
9 a decedent [ dies ] died or an income interest [begins and it is a periodic due date. An income]
10 began, a fiduciary shall allocate the receipt or disbursement to income.
11 3. If an income receip t or disbursement is not periodic or has no due date, a
12 fiduciary shall [ be treated ] tr eat the r eceipt or disbursement under this section as
13 accruing from day to day [ if its due date is not periodic or it has no due date ]. The fiduciary
14 shall allocate to principal the portion of the receipt or disbursement accruing before the date
15 on which a decedent [ dies ] died or an income interest [begins shall be allocated to principal]
16 began, and shall allocate the balance [ shall be allocated ] to income.
17 [ 3. ] 4. A r eceipt or disbursement is periodic under subsections 2 and 3 of this
18 section if:
19 (1) The receipt or disbursement shall be paid at regula r intervals under an
20 obligation to make payments; or
21 (2) The payer customarily makes payments at regu lar intervals.
22 5. An item of income or [ an ] obligation is due under this section on the date [ a
23 payment ] the payer is required to make a payment . If a payment date is not stated, there is
24 no due date [ for the purposes of sections 469.401 to 469.467 ].
25 6. Distributions to shareholders or other owners from an entity to which section
26 469.423 applies are [ deemed to be ] due :
27 (1) On the date fixed by or on behalf of the entity for determining [ who is ] the
28 persons entitled to receive the distribution [ or , ] ;
29 (2) If no date is fixed, on the [ declaration ] date [ for ] of the decision by or on behalf
30 of the entity to make the distribution[ . A due date is periodic for receipts or disbursements
31 that shall be paid at regular intervals under a lease or an obligation to pay interest or if an
32 entity customarily makes distributions at regular intervals ] ; or
33 (3) If no date is fixed and the fiduciary does not know the date of the decision by
34 or on behalf of the entity to make the distribution, on the date the fiduciary learns of the
35 decision .
469.421. 1. [ For purposes of ] In this section, [ the phrase ] "undistributed income"
2 means net income received on or before the date on which an income interest ends. The
3 [ phrase ] term does not include an item of income or expense that is due or accrued[ , ] or net
4 income that has been added or is required to be added to principal under the terms of the trust.
5 2. Except as otherwise pr ovided in subsection 3 of this section, when a mandatory
6 income interest of a beneficiary ends, the [ trustee ] fiduciary shall pay [ to a mandatory
7 income beneficiary who survives that date, or the estate of a deceased mandatory income
8 beneficiary whose death causes the interest to end, ] the beneficiary's share of the
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9 undistributed income that is not disposed of under the terms of the trust [ unless the ] to the
10 beneficiary or , if the beneficiary does not survive the date the inter est ends, to the
11 beneficiary’ s estate.
12 3. If a beneficiary has an unqualified power to [ revoke ] withdraw more than five
13 percent of the value of a trust immediately before [ the ] an income interest ends[ . In the latter
14 case, ] :
15 (1) The fiduciary shall allocate to principal the undistributed income from the
16 portion of the trust that may be [ revoked shall be added to principal ] withdrawn; and
17 (2) Subsection 2 of this section applies only to the balance of the undistributed
18 income .
19 [ 3. ] 4. When a [ trustee's ] fiduciary's obligation to pay a fixed annuity or a fixed
20 fraction of the value of [ the trust's ] assets ends, the [ trustee ] fiduciary shall prorate the final
21 payment [ if and to the extent ] as required [ by applicable law to accomplish a purpose of the
22 trust or its settlor relating ] to pr eserve an income tax , gift tax , estate tax, or other tax
23 [ requirements ] benefit .
469.423. 1. [ For purposes of ] In this section[ , the term ] :
2 (1) "Capital distribution" means an entity distribution of money that is a:
3 (a) Return of capital; or
4 (b) Distribution in total or partial liquidation of the entity;
5 (2) "Entity" :
6 (a) Means a corporation, partnership, limited liability company , regulated investment
7 company , real estate investment trust, common trust fund, or any other or ganization [ in which
8 a trustee has an interest, other than a trust or estate to which section 469.425 applies, a
9 business or activity to which section 469.427 applies, or an asset-backed security to which
10 section 469.449 applies. ] or arrangement in which a fiduciary owns or holds an inter est,
11 whether or not the entity is a taxpayer for federal income tax purposes; and
12 (b) Does not include:
13 a. A trust or estate to which section 469.425 applies;
14 b. A business or other activity to which section 469.427 applies that is not
15 conducted by an entity described in paragraph (a) of this subdivision;
16 c. An asset-backed security; or
17 d. An instrument or arrangement to which section 469.450 applies;
18 (3) "Entity distribution" means a payment or transfer by an entity made to a
19 person in the person’ s capacity as an owner or holder of an inter est in the entity .
20 2. In this section, an attribute or action of an entity includes an attribute or
21 action of any other entity in which the entity owns or holds an interes t, including an
22 inter est owned or held indirect ly thr ough another entity .
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23 [ 2. ] 3. Except as otherwise provided in [ this section ] subdivisions (2) to (4) of
24 subsection 4 of this section , a [ trustee ] fiduciary shall allocate to income :
25 (1) Money received [ from ] in an entity[.
26 3. A trustee shall allocate the following receipts from an entity to principal:
27 (1) Property other than money;
28 (2) Money received in one distribution or a series of related distributions in exchange
29 for part or all of a trust's interest in the entity;
30 (3) Money received in total or partial liquidation of the entity; and
31 (4) Money received from an entity that is] distribution; and
32 (2) T angible personal pr operty of nominal value re ceived fr om the entity .
33 4. A fiduciary shall allocate to principal:
34 (1) Pr operty r eceived in an entity distribution that is not:
35 (a) Money; or
36 (b) T angible personal pr operty of nominal value;
37 (2) Money recei ved in an entity distribution in an exchange for part or all of the
38 fiduciary’ s interes t in the entity , to the extent the entity distribution reduc es the
39 fiduciary’ s intere st in the entity relat ive to the interes ts of other persons that own or
40 hold interes ts in the entity;
41 (3) Money recei ved in an entity distribution that the fiduciary determines or
42 estimates is a capital distribution; and
43 (4) Money recei ved in an entity distribution fro m an entity that is:
44 (a) A regulated investment company or [ a ] real estate investment trust if the money
45 [ distributed ] received is a capital gain dividend for federal income tax purposes[.
46 4. Money is received in partial liquidation:
47 (1) T o the extent that the entity , at or near the time of a distribution, indicates that
48 such money is a distribution in partial liquidation; or
49 (2) If] ; or
50 (b) T reat ed for federal income tax purposes comparably to the tr eatment
51 described in paragraph (a) of this subdivision.
52 5. A fiduciary may determine or estimate that money rece ived in an entity
53 distribution is a capital distribution:
54 (1) By relyin g, without inquiry or investigation, on a characterization of the
55 entity distribution prov ided by or on behalf of the entity unless the fiduciary:
56 (a) Determines, on the basis of information known to the fiduciary , that the
57 characterization is or may be incorr ect; or
58 (b) Owns or holds mor e than fifty per cent of the voting inter est in the entity;
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59 (2) By determining or estimating, on the basis of information known to the
60 fiduciary or pr ovided to the fiduciary by or on behalf of the entity , that the total amount
61 of money and property received by the fiduciary in [ a ] the entity distribution or a series of
62 related entity distributions is or will be greater than twenty percent of the [entity's gross
63 assets, as shown by the entity's year -end financial statements immediately preceding the
64 initial receipt.
65 5. Money is not received in partial liquidation, nor may it be taken into account
66 pursuant to subdivision (2) of subsection 4 of this section, to the extent that such money does
67 not exceed the amount of income tax that a trustee or beneficiary shall pay on taxable income
68 of the entity that distributes the money .
69 6. A trustee may rely upon a statement made by an entity about the source or
70 character of a distribution if the statement is made at or near the time of distribution by the
71 entity's board of directors or other person or group of persons authorized to exercise powers to
72 pay money or transfer property comparable to those of a corporation's board of directors.] fair
73 market value of the fiduciary’ s interes t in the entity; or
74 (3) If neither subdivision (1) nor (2) of this subsection applies, by considering the
75 factors in subsection 6 of this section and the information known to the fiduciary or
76 pr ovided to the fiduciary by or on behalf of the entity .
77 6. In making a determination or estimate under subdivision (3) of subsection 5 of
78 this section, a fiduciary may consider:
79 (1) A characterization of an entity distribution pr ovided by or on behalf of the
80 entity;
81 (2) The amount of money or pr operty received in:
82 (a) The entity distribution; or
83 (b) What the fiduciary determines is or will be a series of rel ated entity
84 distributions;
85 (3) The amount described in subdivision (2) of this subsection compar ed to the
86 amount the fiduciary determines or estimates is, during the curren t or pr eceding
87 accounting periods:
88 (a) The entity’ s operating income;
89 (b) The pr oceeds of the entity’ s sale or other disposition of:
90 a. All or part of the business or other activity conducted by the entity;
91 b. One or mor e business assets that ar e not sold to customers in the ordinary
92 course of the business or other activity conducted by the entity; or
93 c. One or mor e assets other than business assets, unless the entity’ s primary
94 activity is to invest in assets to real ize gain on the disposition of all or some of the assets;
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95 (c) If the entity’ s primary activity is to invest in assets to real ize gain on the
96 disposition of all or some of the assets, the gain r ealized on the disposition;
97 (d) The entity’ s r egular , periodic entity distributions;
98 (e) The amount of money the entity has accumulated;
99 (f) The amount of money the entity has borr owed;
100 (g) The amount of money the entity has r eceived fro m the sour ces described in
101 sections 469.433, 469.439, 469.441, and 469.443; and
102 (h) The amount of money the entity has r eceived fr om a source not otherwise
103 described in this paragraph; and
104 (4) Any other factor the fiduciary determines is r elevant.
105 7. If, after applying subsections 3 to 6 of this section, a fiduciary determines that
106 a part of an entity distribution is a capital distribution but is in doubt about the amount
107 of the entity distribution that is a capital distribution, the fiduciary shall allocate to
108 principal the amount of the entity distribution that is in doubt.
109 8. If a fiduciary r eceives additional information about the application of this
110 section to an entity distribution before the fiduciary has paid part of the entity
111 distribution to a beneficiary , the fiduciary may consider the additional information
112 befor e making the payment to the beneficiary and may change a decision to make the
113 payment to the beneficiary .
114 9. If a fiduciary r eceives additional information about the application of this
115 section to an entity distribution after the fiduciary has paid part of the entity
116 distribution to a beneficiary , the fiduciary is not req uired to change or r ecover the
117 payment to the beneficiary but may consider that information in determining whether
118 to exercise the power to adjust under section 469.405.
469.425. A [ trustee ] fiduciary shall allocate to income an amount received as a
2 distribution of income , including a unitrust distribution under sections 469.471 to
3 469.487, from a trust or [ an ] estate in which the [ trust ] fiduciary has an interest , other than [ a ]
4 an interes t the fiduciary purchased [ interest ] in a trust that is an investment entity , and
5 shall allocate to principal an amount received as a distribution of principal from [ such a ] the
6 trust or estate. If a [ trustee ] fiduciary purchases , or r eceives fro m a settlor , an interest in a
7 trust that is an investment entity , [ or a decedent or donor transfers an interest in such a trust to
8 a trustee, ] section 469.423 [ or ] , 469.449 [ shall apply ] , or 469.450 applies to a receipt from
9 the trust.
469.427. 1. [ If a trustee who conducts ] This section applies to a business or other
2 activity conducted by a fiduciary if the fiduciary determines that it is in the [ best interest ]
3 inter ests of [ all ] the beneficiaries to account separately for the business or other activity
4 instead of :
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5 (1) Accounting for [ it ] the business or other activity as part of the [ trust's ]
6 fiduciary's general accounting records[ , ] ; or
7 (2) Conducting the [ trustee ] business or other activity thr ough an entity described
8 in paragraph (a) of subdivision (2) of subsection 1 of section 469.423.
9 2. A fiduciary may [ maintain separate accounting records ] account separately
10 under this section for [ its ] the transactions of a business or other activity , whether or not
11 [ its ] assets of the business or other activity are segregated from other [ trust ] assets held by
12 the fiduciary .
13 [ 2. ] 3. A [ trustee who ] fiduciary that accounts separately under this section for a
14 business or other activity :
15 (1) May determine :
16 (a) The extent to which the net cash receipts [ shall ] of the business or other activity
17 shall be retained for :
18 a. W orking capital[ , ] ;
19 b. The acquisition or replacement of fixed assets[ , ] ; and
20 c. Other reasonably foreseeable needs of the business or other activity[ , ] ; and
21 (b) The extent to which the remaining net cash receipts are accounted for as principal
22 or income in the [ trust's ] fiduciary's general accounting records[ . If a trustee sells assets of
23 the business or other activity , other than in the ordinary course of the business or activity , the
24 trustee ] for the trust;
25 (2) May make a determination under subdivision (1) of this subsection
26 separately and differen tly fro m the fiduciary’ s decisions concerning distributions of
27 income or principal; and
28 (3) Shall account for the net amount received fr om the sale of an asset of the
29 business or other activity , other than a sale in the ordinary course of the business or
30 other activity , as principal in the [ trust's ] fiduciary's general accounting records for the
31 trust, to the extent the [ trustee ] fiduciary determines that the net amount received is no
32 longer required in the conduct of the business or other activity .
33 [ 3. ] 4. Activities for which a [ trustee may maintain separate accounting records ]
34 fiduciary may account separately under this section include:
35 (1) Retail, manufacturing, service , and other traditional business activities;
36 (2) Farming;
37 (3) Raising and selling livestock and other animals;
38 (4) [ Management of ] Managing rental properties;
39 (5) [ Extraction of ] Extracting minerals , water , and other natural resources;
40 (6) Grow ing and cutting timber [ operations ]; [ and ]
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41 (7) [ Activities ] An activity to which section 469.447 , 469.449, or 469.450 applies[ . ] ;
42 and
43 (8) Any other business conducted by the fiduciary .
469.429. A [ trustee ] fiduciary shall allocate to principal:
2 (1) T o the extent not allocated to income [ pursuant to ] under sections [ 469.401 ]
3 469.399 to [ 469.467 ] 469.487 , [ assets ] an asset received from [ a transferor ] :
4 (a) An individual during the [ transferor's ] individual's lifetime[ , a decedent's ] ;
5 (b) An estate[ , ] ;
6 (c) A trust [ with a terminating ] on termination of an income interest[ , ] ; or
7 (d) A payer under a contract naming the [ trust or its trustee ] fiduciary as beneficiary;
8 (2) Except as otherwise pro vided in sections 469.423 to 469.450, money or other
9 property received from the sale, exchange, liquidation , or change in form of a principal asset[ ,
10 including realized profit, subject to sections 469.423 to 469.467 ];
11 (3) [ Amounts ] An amount recovered from a third [ parties ] party to reimburse the
12 [ trust ] fiduciary because of [ disbursements ] a disbursement described in [ subdivision (7) of ]
13 subsection 1 of section 469.453 or for [ other reasons ] another reas on to the extent not based
14 on [ the ] loss of income;
15 (4) Proceeds of property taken by eminent domain, [ but a separate award made ]
16 except that pr oceeds awarded for [ the ] loss of income [ with respect to ] in an accounting
17 period [ during which ] are income if a current income beneficiary had a mandatory income
18 interest [ is income ] during the period ;
19 (5) Net income received in an accounting period during which there is no beneficiary
20 to [ whom ] which a [ trustee ] fiduciary may or shall distribute income; and
21 (6) Other receipts as provided in sections 469.435 to [ 469.449 ] 469.450 .
469.431. T o the extent [ that a trustee accounts ] a fiduciary does not account for
2 [ receipts from ] the management of rental property [ pursuant to this section ] as a business
3 under section 469.427 , the [ trustee ] fiduciary shall allocate to income an amount received as
4 rent of real or personal property , including an amount received for cancellation or renewal of
5 a lease. An amount received as a refundable deposit, including a security deposit or a deposit
6 that is to be applied as rent for future periods[ , shall be added to principal and held subject to
7 the terms of the lease and is not available for distribution to a beneficiary until the trustee's
8 contractual obligations have been satisfied with respect to that amount. ] :
9 (1) Shall be added to principal and held subject to the terms of the lease, except
10 as otherwise pr ovided by law other than sections 469.399 to 469.487; and
11 (2) Is not allocated to income or available for distribution to a beneficiary until
12 the fiduciary’ s contractual obligations have been satisfied with res pect to that amount.
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469.432. 1. This section does not apply to an obligation to which section 469.437,
2 469.439, 469.441, 469.443, 469.447, 469.449, or 469.450 applies.
3 2. A fiduciary shall allocate to income, without provi sion for amortization of
4 pr emium, an amount received as interest[ , whether determined at a fixed, variable or floating
5 rate, ] on an obligation to pay money to the [ trustee ] fiduciary , including an amount received
6 as consideration for prepaying principal[ , shall be allocated to income without any provision
7 for amortization of premium ].
8 [ 2. ] 3. A [ trustee ] fiduciary shall allocate to principal an amount received from the
9 sale, redemption , or other disposition of an obligation to pay money to the [ trustee more than
10 one year after it is purchased or acquired by the trustee, including an obligation whose
11 purchase price or value when it is acquired is less than its value at maturity . If the obligation
12 matures within one year after it is purchased or acquired by the trustee, an amount received in
13 excess of its purchase price or its value when acquired by the trust shall be allocated to
14 income ] fiduciary . A fiduciary shall allocate to income the incr ement in value of a bond
15 or other obligation for the payment of money bearing no stated inter est but payable or
16 r edeemable, at maturity or another futur e time, in an amount that exceeds the amount
17 in consideration of which it was issued .
18 [ 3. This section does not apply to an obligation to which section 469.437, 469.439,
19 469.441, 469.443, 469.447 or 469.449 applies.]
469.433. 1. This section does not apply to a contract to which section 469.437
2 applies.
3 2. Except as otherwise provided in subsection [ 2 ] 3 of this section, a [ trustee ]
4 fiduciary shall allocate to principal the proceeds of a life insurance policy or other contract
5 [ in which the trust or its trustee is named ] rec eived by the fiduciary as beneficiary , including
6 a contract that insures [ the trust or its trustee ] against [ loss for ] damage to, destruction of, or
7 loss of title to [ a trust ] an asset. The [ trustee ] fiduciary shall allocate dividends on an
8 insurance policy to income [ if ] to the extent premiums on the policy are paid from income[ , ]
9 and to principal [ if ] to the extent premiums on the policy are paid from principal.
10 [ 2. ] 3. A [ trustee ] fiduciary shall allocate to income proceeds of a contract that
11 insures the [ trustee ] fiduciary against loss of :
12 (1) Occupancy or other use by [ an income beneficiary , loss of ] a curr ent income[ , ]
13 beneficiary;
14 (2) Income; or[ , ]
15 (3) Subject to section 469.427, [ loss of ] profits from a business.
16 [ 3. This section does not apply to a contract to which section 469.437 applies.]
469.435. 1. If a [ trustee ] fiduciary determines that an allocation between income
2 and principal [ and income ] required by section 469.437, 469.439, 469.441, 469.443 or
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3 469.449 is insubstantial, the [ trustee ] fiduciary may allocate the entire amount to principal ,
4 unless [ one of the circumstances described in ] subsection [ 3 ] 5 of section 469.405 applies to
5 the allocation. [ This power ]
6 2. A fiduciary may [ be exercised by a cotrustee in the circumstances described in
7 subsection 4 of section 469.405 and may be released for the reasons and in the manner
8 described in subsection 5 of section 469.405. ] pr esume an allocation is [ presumed to be ]
9 insubstantial under subsection 1 of this section if:
10 (1) The amount of the allocation would increase or decrease net income in an
11 accounting period, as determined before the allocation, by less than ten percent; [ or ] and
12 (2) [ The value of ] The asset producing the receipt [ for which the allocation would ] to
13 be [ made is ] allocated has a fair market value less than ten percent of the total fair market
14 value of the [ trust's ] assets owned or held by the fiduciary at the beginning of the
15 accounting period.
16 3. The power to make a determination under subsection 1 of this section may be:
17 (1) Exerc ised by a co-fiduciary in the manner described in subsection 6 of section
18 469.405; or
19 (2) Released or delegated for a reas on described in subsection 7 of section
20 469.405 and in the manner described in subsection 8 of section 469.405.
469.437. 1. As used in this section, the following terms mean:
2 (1) ["Payment", an amount that is:
3 (a) Received or withdrawn from a plan; or
4 (b) One of a series of distributions that have been or will be received over a fixed
5 number of years or during the life of one or more individuals under any contractual or other
6 arrangement, or is a single payment from a plan that the trustee could have received over a
7 fixed number of years or during the life of one or more individuals;
8 (2) "Plan", a contractual, custodial, trust or other arrangement that provides for
9 distributions to the trust, including, but not limited to, qualified retirement plans, Individual
10 Retirement Accounts, Roth Individual Retirement Accounts, public and private annuities, and
11 deferred compensation, including payments received directly from an entity as defined in
12 section 469.423 regardless of whether or not such distributions are made from a specific fund
13 or account.
14 2. If any portion of a payment is characterized as a distribution to the trustee of
15 interest, dividends or a dividend equivalent, the trustee shall allocate the portion so
16 characterized to income. The trustee shall allocate the balance of that payment to principal.
17 3. If no part of a payment is allocated to income pursuant to subsection 2 of this
18 section, then for each accounting period of the trust that any payment is received by the trust
19 with respect to the trust's interest in a plan, the trustee shall allocate to income that portion of
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20 the aggregate value of all payments received by the trustee in that accounting period equal to
21 the amount of plan income attributable to the trust's interest in the plan for that calendar year .
22 The trustee shall allocate the balance of that payment to principal.
23 4. For purposes of this section, if a payment is received from a plan that maintains a
24 separate account or fund for its participants or account holders, including, but not limited to,
25 defined contribution retirement plans, Individual Retirement Accounts, Roth Individual
26 Retirement Accounts, and some types of deferred compensation plans, the phrase "plan
27 income" shall mean either the amount of the plan account or fund held for the benefit of the
28 trust that, if the plan account or fund were a trust, would be allocated to income pursuant to
29 sections 469.401 to 469.467 for that accounting period, or four percent of the value of the
30 plan account or fund on the first day of that accounting period. The method of determining
31 plan income pursuant to this subsection shall be chosen by the trustee in the trustee's
32 discretion. The trustees may change the method of determining plan income pursuant to this
33 subsection for any future accounting period.
34 5. For purposes of this section if the payment is received from a plan that does not
35 maintain a separate account or fund for its participants or account holders, including by way
36 of example and not limitation defined benefit retirement plans and some types of deferred
37 compensation plans, the term "plan income" shall mean four percent of the total present value
38 of the trust's interest in the plan as of the first day of the accounting period, based on
39 reasonable actuarial assumptions as determined by the trustee.
40 6. Notwithstanding subsections 1 to 5 of this section, with respect to a trust where an
41 election to qualify for a marital deduction under Section 2056(b)(7) or Section 2523(f) of the
42 Internal Revenue Code of 1986, as amended, has been made, or a trust that qualified for the
43 marital deduction under either Section 2056(b)(5) or Section 2523(e) of the Internal Revenue
44 Code of 1986, as amended, a trustee shall determine the plan income for the accounting
45 period as if the plan were a trust subject to sections 469.401 to 469.467. Upon request of the
46 surviving spouse, the trustee shall demand that the person administering the plan distribute
47 the plan income to the trust. The trustee shall allocate a payment from the plan to income to
48 the extent of the plan income and distribute that amount to the surviving spouse. The trustee
49 shall allocate the balance of the payment to principal. Upon request of the surviving spouse,
50 the trustee shall allocate principal to income to the extent the plan income exceeds payments
51 made from the plan to the trust during the accounting period.
52 7. If, to obtain an estate or gift tax marital deduction for a trust, a trustee shall allocate
53 more of a payment to income than provided for by this section, the trustee shall allocate to
54 income the additional amount necessary to obtain the marital deduction.] "Internal income
55 of a separate fund", the amount determined under subsection 2 of this section;
56 (2) "Marital trust", a trust:
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57 (a) Of which the settlor's surviving spouse is the only curr ent income beneficiary
58 and is entitled to a distribution of all the curren t net income of the trust; and
59 (b) That qualifies for a marital deduction with res pect to the settlor's estate
60 under 26 U.S.C. Section 2056, as amended, because:
61 a. An election to qualify for a marital deduction under 26 U.S.C. Section 2056(b)
62 (7), as amended, has been made; or
63 b. The trust qualifies for a marital deduction under 26 U.S.C. Section 2056(b)(5),
64 as amended;
65 (3) "Payment", an amount a fiduciary may r eceive over a fixed number of years
66 or during the life of one or mor e individuals because of services ren dered or pr operty
67 transferr ed to the payer in exchange for futur e amounts the fiduciary may rece ive. The
68 term includes an amount rece ived in money or pr operty fr om the payer’ s general assets
69 or fr om a separate fund crea ted by the payer;
70 (4) "Separate fund", includes a private or commer cial annuity , an individual
71 r etir ement account, and a pension, pro fit-sharing, stock bonus, or stock-ownership plan.
72 2. For each accounting period, the following rules apply to a separate fund:
73 (1) The fiduciary shall determine the internal income of the separate fund as if
74 the separate fund was a trust subject to sections 469.399 to 469.487;
75 (2) If the fiduciary cannot determine the internal income of the separate fund
76 under subdivision (1) of this subsection, the internal income of the separate fund is
77 deemed to equal thr ee per cent of the value of the separate fund, according to the most
78 r ecent statement of value pr eceding the beginning of the accounting period; and
79 (3) If the fiduciary cannot determine the value of the separate fund under
80 subdivision (2) of this subsection, the value of the separate fund is deemed to equal the
81 pr esent value of the expected futur e payments, as determined under 26 U.S.C. Section
82 7520, as amended, for the month pr eceding the beginning of the accounting period for
83 which the computation is made.
84 3. A fiduciary shall allocate a payment received fr om a separate fund during an
85 accounting period to income, to the extent of the internal income of the separate fund
86 during the period, and the balance to principal.
87 4. The fiduciary of a marital trust shall:
88 (1) W ithdraw fr om a separate fund the amount the curren t income beneficiary
89 of the trust re quests the fiduciary to withdraw , not great er than the amount by which
90 the internal income of the separate fund during the accounting period exceeds the
91 amount the fiduciary otherwise r eceives fr om the separate fund during the period;
92 (2) T ransfer fr om principal to income the amount the curr ent income
93 beneficiary requ ests the fiduciary to transfer , not great er than the amount by which
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94 the internal income of the separate fund during the period exceeds the amount the
95 fiduciary receiv es fro m the separate fund during the period after the application of
96 subdivision (1) of this subsection; and
97 (3) Distribute to the curr ent income beneficiary as income:
98 (a) The amount of the internal income of the separate fund recei ved or
99 withdrawn during the period; and
100 (b) The amount transferred fro m principal to income under subdivision (2) of
101 this subsection.
102 5. For a trust, other than a marital trust, of which one or mor e curren t income
103 beneficiaries are entitled to a distribution of all the curr ent net income, the fiduciary
104 shall transfer fro m principal to income the amount by which the internal income of a
105 separate fund during the accounting period exceeds the amount the fiduciary receives
106 fr om the separate fund during the period.
469.439. 1. [ As used ] In this section, [ the phrase ] "liquidating asset" means an asset
2 whose value will diminish or terminate because the asset is expected to produce receipts for a
3 [ period of ] limited [ duration ] time . The [ phrase ] term includes a leasehold, patent,
4 copyright, royalty right, and right to receive payments during a period of more than one year
5 under an arrangement that does not provide for the payment of interest on the unpaid balance.
6 [ The phrase ]
7 2. This section does not [ include a payment ] apply to a recei pt subject to section
8 469.423, 469.437, [ resources subject to section ] 469.441, [ timber subject to section ] 469.443,
9 [ an activity subject to section ] 469.447, [ an asset subject to section ] 469.449, 469.450, or [ any
10 asset for which the trustee establishes a reserve for depreciation pursuant to section ] 469.455.
11 [ 2. ] 3. A [ trustee ] fiduciary shall allocate :
12 (1) T o income [ ten percent of the receipts from ] :
13 (a) A r eceipt prod uced by a liquidating asset [ and the balance ] , to the extent the
14 r eceipt does not exceed thr ee per cent of the value of the asset; or
15 (b) If the fiduciary cannot determine the value of the asset, ten per cent of the
16 r eceipt; and
17 (2) T o principal , the balance of the receip t .
469.441. 1. T o the extent [ that a trustee accounts for receipts ] a fiduciary does not
2 account for a receip t from an interest in minerals , water , or other natural resources [ pursuant
3 to this section ] as a business under section 469.427 , the [ trustee ] fiduciary shall allocate
4 [ them as follows ] the receip t :
5 (1) [ If ] T o income, to the extent received :
6 (a) As [ nominal ] delay rental or [ nominal ] annual rent on a lease[ , a receipt shall be
7 allocated to income ];
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8 (b) As a factor for inter est or the equivalent of inter est under an agree ment
9 cr eating a pr oduction payment; or
10 (c) On account of an interes t in r enewable water;
11 (2) T o principal, if received from a production payment, [ a receipt shall be allocated
12 to income if and to the extent that the agreement creating the production payment provides a
13 factor for interest or its equivalent. The balance shall be allocated to principal; ] to the extent
14 paragraph (b) of subdivision (1) of this subsection does not apply; or
15 (3) [ If an amount received ] Between income and principal equitably , to the extent
16 r eceived:
17 (a) On account of an interes t in nonr enewable water;
18 (b) As a royalty , shut-in-well payment, take-or -pay payment, or bonus [ or delay
19 rental is more than nominal, ninety percent shall be allocated to principal and the balance to
20 income ]; or
21 [ (4) If an amount is received] (c) From a working interest or any other interest not
22 provided for in subdivision (1)[ , ] or (2) [ or (3) ] of this subsection[ , ninety percent of the net
23 amount received shall be allocated to principal and the balance to income ] or paragraph (a)
24 or (b) of this subdivision .
25 2. [ An amount received on account of ] This section applies to an interest [in water
26 that is renewable shall be allocated to income. If the water is not renewable, ninety percent of
27 the amount shall be allocated to principal and the balance to income.
28 3. Sections 469.401 to 469.467 apply] owned or held by a fiduciary whether or not a
29 [ decedent or donor ] settlor was extracting minerals, water , or other natural resources before
30 the fiduciary owned or held the interest [ became subject to the trust ].
31 3. An allocation of a recei pt under subdivision (3) of subsection 1 of this section
32 is pr esumed to be equitable if the amount allocated to principal is equal to the amount
33 allowed by T itle 26 of the United States Code, as amended, as a deduction for depletion
34 of the interes t.
35 4. If a [ trust ] fiduciary owns or holds an interest in minerals, water , or other natural
36 resources [ on ] before August 28, [ 2001 ] 2026 , the [ trustee ] fiduciary may allocate receipts
37 from the interest as provided in [ sections 469.401 to 469.467 ] this section or in the manner
38 used by the [ trustee ] fiduciary before August 28, [ 2001 ] 2026 . If the [ trust ] fiduciary
39 acquires an interest in minerals, water , or other natural resources on or after August 28,
40 [ 2001 ] 2026 , the [ trustee ] fiduciary shall allocate receipts from the interest as provided in
41 [ sections 469.401 to 469.467 ] this section .
469.443. 1. T o the extent [ that a trustee accounts ] a fiduciary does not account for
2 receipts from the sale of timber and related products [ pursuant to this section ] as a business
3 under section 469.427 , the [ trustee ] fiduciary shall allocate the net receipts:
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4 (1) T o income , to the extent [ that ] the amount of timber [ removed ] cut from the land
5 does not exceed the rate of growth of the timber [ during the accounting periods in which a
6 beneficiary has a mandatory income interest ];
7 (2) T o principal , to the extent [ that ] the amount of timber [ removed ] cut from the land
8 exceeds the rate of growth of the timber or the net receipts are from the sale of standing
9 timber;
10 (3) [ T o or ] Between income and principal if the net receipts are from the lease of
11 [ timberland ] land used for gro wing and cutting timber or from a contract to cut timber
12 from land [ owned by a trust ], by determining the amount of timber [ removed ] cut from the
13 land under the lease or contract and applying the rules in subdivisions (1) and (2) of this
14 subsection; or
15 (4) T o principal , to the extent [ that ] advance payments, bonuses , and other payments
16 are not allocated [ pursuant to either ] under subdivision (1), (2) , or (3) of this subsection.
17 2. In determining net receipts to be allocated [ pursuant to ] under subsection 1 of this
18 section, a [ trustee ] fiduciary shall deduct and transfer to principal a reasonable amount for
19 depletion.
20 3. [ Sections 469.401 to 469.467 apply ] This section applies to land owned or held
21 by a fiduciary whether or not a [ decedent or transferor ] settlor was [ harvesting ] cutting
22 timber from the land before the fiduciary owned or held the property [ before it became
23 subject to the trust ].
24 4. If a [ trust ] fiduciary owns or holds an interest in [ timberland on ] land used for
25 gr owing and cutting timber before August 28, [ 2001 ] 2026 , the [ trustee ] fiduciary may
26 allocate net receipts from the sale of timber and related products as provided in [ sections
27 469.401 to 469.467 ] this section or in the manner used by the [ trustee ] fiduciary before
28 August 28, [ 2001 ] 2026 . If the [ trust ] fiduciary acquires an interest in [ timberland ] land
29 used for gr owing and cutting timber on or after August 28, [ 2001 ] 2026 , the [ trustee ]
30 fiduciary shall allocate net receipts from the sale of timber and related products as provided
31 in [ sections 469.401 to 469.467 ] this section .
469.445. 1. If a trust recei ved prop erty for which a gift or estate tax marital
2 deduction [ is allowed for all or part of a trust whose ] was allowed and the settlor ’ s spouse
3 holds a mandatory income inter est in the trust, the spouse may requ ire the trustee, to
4 the extent the trust assets [ consist substantially of property that does ] otherwise do not
5 provide the spouse with suf ficient income from or use of the trust assets[ , and if the amounts
6 that the trustee transfers from principal to income pursuant to section 469.405 and distributes
7 to the spouse from principal pursuant to the terms of the trust are insufficien t to provide the
8 spouse with the beneficial enjoyment required to obtain the marital ] to qualify for the
9 deduction, [ the spouse may require the trustee ] to :
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10 (1) Make property productive of income[ , ] ;
11 (2) Convert property to pr operty pr oductive of income within a reasonable time[ , ] ;
12 or
13 (3) Exercise the power [ conferred by subsection 1 of ] to adjust under section
14 469.405.
15 2. The trustee may decide which action or combination of actions in subsection 1 of
16 this section to take.
17 [ 2. In cases not governed by subsection 1 of this section, proceeds from the sale or
18 other disposition of an asset are principal without regard to the amount of income the asset
19 produces during any accounting period.]
469.447. 1. [ As used ] In this section, [ the term ] "derivative" means a contract [ or
2 financial ] , instrument , other arrangement, or a combination of contracts [ and financial ] ,
3 instruments , or other arrangements, the value, rights, and obligations of which [ gives a
4 trust the right or obligation to participate in some or all changes in the price of a ] are, in
5 whole or in part, dependent on or derived fr om an underlying tangible or intangible asset
6 [ or group of assets, or changes in a rate, an index of prices or ] , gro up of tangible or
7 intangible assets, index, or occurr ence of an event. The term includes stocks, fixed
8 income securities, and financial instruments and arrangements based on indices,
9 commodities, inter est rates, [ or other market indicator for an asset or a group of assets ]
10 weather -r elated events, and cr edit default events .
11 2. T o the extent [ that a trustee ] a fiduciary does not account [ pursuant to section
12 469.427 for transactions ] for a transaction in derivatives[ , the trustee ] as a business under
13 section 469.427, the fiduciary shall allocate [ to principal ] ten per cent of receipts from the
14 transaction and ten percen t of disbursements made in connection with [ those transactions ]
15 the transaction to income and the balance to principal .
16 3. Subsection 4 of this section applies if :
17 (1) A [ trustee ] fiduciary:
18 (a) Grants an option to buy property from [ the ] a trust, whether or not the trust owns
19 the property when the option is granted[ , ] ;
20 (b) Grants an option that permits another person to sell property to the trust[ , ] ; or
21 (c) Acquires an option to buy property for the trust or an option to sell an asset owned
22 by the trust[ , ] ; and
23 (2) The [ trustee ] fiduciary or other owner of the asset is required to deliver the asset
24 if the option is exercised[ , ] .
25 4. If this subsection applies, the fiduciary shall allocate ten per cent to income
26 and the balance to principal of the following amounts:
27 (1) An amount received for granting the option [ shall be allocated to principal. ] ;
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28 (2) An amount paid to acquire the option [ shall be paid from principal. A ] ; and
29 (3) Gain or loss realized [ upon ] on the exercise [ of an option, including an option
30 granted to a settlor ] , exchange, settlement, offset, closing, or expiration of the [ trust for
31 services rendered, shall be allocated to principal ] option .
469.449. 1. [As used in this section, the phrase "asset-backed security" means an
2 asset whose value is based upon the right it gives the owner to receive distributions from the
3 proceeds of financial assets that provide collateral for the security . The phrase includes an
4 asset that gives the owner the right to receive from the collateral financial assets only the
5 interest or other current return or only the proceeds other than interest or current return. The
6 phrase does not include an asset to which section 469.423 or 469.437 applies.
7 2. If a trust receives a payment from interest or other current return and from other
8 proceeds of the collateral financial assets, the trustee] Except as otherwise pro vided in
9 subsection 2 of this section, a fiduciary shall allocate to income [ the portion of ] a receipt
10 fr om or relat ed to an asset-backed security , to the extent the [ payment which the ] payer
11 identifies the payment as being from interest or other current return , and [ shall allocate ] to
12 principal the balance of the [ payment to principal ] r eceipt .
13 [ 3. ] 2. If a [ trust ] fiduciary receives one or more payments in exchange for part or
14 all of the [ trust's entire ] fiduciary's interest in an asset-backed security [ in one accounting
15 period, the trustee shall allocate the payments to principal. If a payment is one of a series of
16 payments that will result in the ] , including a liquidation or r edemption of the [ trust's ]
17 fiduciary's interest in the security [ over more than one accounting period ], the [ trustee ]
18 fiduciary shall allocate [ ten ] to income ten percent of r eceipts fr om the [ payment to
19 income ] transaction and [ the balance to principal ] ten per cent of disbursements made in
20 connection with the transaction, and to principal the balance of the receipts and
21 disbursements .
469.450. A fiduciary shall allocate re ceipts fr om or r elated to a financial
2 instrument or arrangement not otherwise addr essed by sections 469.399 to 469.487. The
3 allocation shall be consistent with sections 469.447 and 469.449.
469.451. [A trustee shall make the following disbursements from income to the extent
2 that they are not disbursements to which paragraph (b) or (c) of] Subject to section 469.456,
3 and except as otherwise provi ded in subdivision (2) or (3) of subsection 3 of section
4 469.413 [ applies ] , a fiduciary shall disburse fr om income :
5 (1) One-half of :
6 (a) The regular compensation of the [ trustee ] fiduciary and [ of ] any person providing
7 investment advisory [ or ] , custodial , or other services to the [ trustee ] fiduciary , to the extent
8 income is sufficient ; and
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9 [ (2) One-half of all expenses] (b) An expense for [ accountings ] an accounting ,
10 judicial [ proceedings ] or nonjudicial pr oceeding , or other [ matters ] matter that [ involve ]
11 involves both [ the ] income and [ remainder ] successive interests , to the extent income is
12 sufficient ;
13 [ (3) All of the other] (2) The balance of the disbursements described in
14 subdivision (1) of this section, to the extent a fiduciary that is an independent person
15 determines that making those disbursements fr om income would be in the intere sts of
16 the beneficiaries;
17 (3) Another ordinary [ expenses ] expense incurred in connection with [ the ]
18 administration, management , or preservation of [ trust ] property and [ the ] distribution of
19 income, including interest, an ordinary [ repairs ] rep air , regularly recurring [ taxes ] tax
20 assessed against principal, and [ expenses ] an expense of [ a ] an accounting, judicial or
21 nonjudicial proceeding , or other matter that [ concerns ] involves primarily [ the ] an income
22 interest , to the extent income is sufficient ; and
23 (4) [ Recurring premiums ] A pr emium on insurance covering [ the ] loss of a principal
24 asset or [ the loss of ] income from or use of the asset.
469.453. 1. [A trustee shall make the following disbursements] Subject to section
2 469.457, and except as otherwise pro vided in subdivision (2) of subsection 3 of section
3 469.413, a fiduciary shall disburse from principal:
4 (1) The [ remaining one-half ] balance of the disbursements described in [subdivisions
5 (1) and (2)] subdivisions (1) and (3) of section 469.451, after application of subdivision (2)
6 of section 469.451;
7 (2) [ All of ] The [ trustee's ] fiduciary's compensation calculated on principal as a fee
8 for acceptance, distribution , or termination[ , and disbursements made to prepare property for
9 sale ];
10 (3) [ Payments ] A payment of an expense to prep are for or execute a sale or other
11 disposition of prop erty;
12 (4) A payment on the principal of a trust debt;
13 [ (4) Expenses of a] (5) A payment of an expense of an accounting, judicial or
14 nonjudicial proceeding , or other matter that [ concerns ] involves primarily [ an interest in ]
15 principal , including a pr oceeding to construe the terms of the trust or protect pr operty ;
16 [ (5) Premiums paid on a policy of] (6) A payment of a pr emium for insurance,
17 including title insurance , not described in subdivision (4) of section 469.451 of which the
18 [ trust ] fiduciary is the owner and beneficiary;
19 [ (6) ] (7) A payment of an estate[ , ] or inheritance [ and other transfer taxes ] tax or
20 other tax imposed because of the death of a decedent , including penalties, apportioned to
21 the trust; and
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22 [ (7) Extraordinary expenses incurred in connection with the management and
23 preservation of trust property;
24 (8) Expenses for a capital improvement to a principal asset, whether in the form of
25 changes to an existing asset or the construction of a new asset, including special assessments;
26 and
27 (9) Disbursements] (8) A payment:
28 (a) Related to environmental matters, including :
29 a. Reclamation[ , ] ;
30 b. Assessing environmental conditions[ , ] ;
31 c. Remedying and removing environmental contamination[ , ] ;
32 d. Monitoring remedial activities and the release of substances[ , ] ;
33 e. Preventing future releases of substances[ , ] ;
34 f. Collecting amounts from persons liable or potentially liable for the costs of [ those ]
35 activities[ , ] described in subparagraphs a. to e. of this paragraph;
36 g. Penalties imposed under environmental laws or regulations [ and ] ;
37 h. Other [ payments made ] actions to comply with [ those ] envir onmental laws or
38 regulations[ , ] ;
39 i. Statutory or common law claims by third parties[ , ] ; and
40 j. Defending claims based on environmental matters[ . ] ; and
41 (b) For a premium for insurance for matters described in paragraph (a) of this
42 subdivision.
43 2. If a principal asset is encumbered with an obligation that requires income from
44 [ that ] the asset to be paid directly to [ the ] a creditor , the [ trustee ] fiduciary shall transfer from
45 principal to income an amount equal to the income paid to the creditor in reduction of the
46 principal balance of the obligation.
469.455. 1. [ As used ] In this section, [ the term ] "depreciation" means a reduction in
2 value due to wear , tear , decay , corrosion , or gradual obsolescence of a [ fixed ] tangible asset
3 having a useful life of more than one year .
4 2. A [ trustee ] fiduciary may transfer to principal a reasonable amount of the net cash
5 receipts from a principal asset that is subject to depreciation, but [ may ] shall not transfer any
6 amount for depreciation:
7 (1) Of [ that portion ] the part of real property used or available for use by a
8 beneficiary as a residence [ or ] ;
9 (2) Of tangible personal property held or made available for the personal use or
10 enjoyment of a beneficiary; or
11 [ (2) During the administration of a decedent's estate; or]
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12 (3) [ Pursuant to ] Under this section [ if the trustee is accounting pursuant to section
13 469.427 ] , to the extent the fiduciary accounts:
14 (a) Under section 469.439 for the asset; or
15 (b) Under section 469.427 for the business or other activity in which the asset is
16 used.
17 3. An amount transferred to principal under this section need not be separately held
18 [ as a separate fund ].
469.456. 1. If a fiduciary makes or expects to make an income disbursement
2 described in subsection 2 of this section, the fiduciary may transfer an appr opriate
3 amount fr om principal to income in one or mor e accounting periods to reim burse
4 income.
5 2. T o the extent the fiduciary has not been and does not expect to be re imbursed
6 by a third party , income disbursements to which subsection 1 of this section applies
7 include:
8 (1) An amount chargeable to principal but paid fr om income because principal
9 is illiquid;
10 (2) A disbursement made to pr epare pr operty for sale, including impro vements
11 and commissions; and
12 (3) A disbursement described in subsection 1 of section 469.453.
13 3. If an asset whose ownership gives rise to an income disbursement becomes
14 subject to a successive inter est after an income interes t ends, the fiduciary may continue
15 to make transfers under subsection 1 of this section.
469.457. 1. If a [ trustee ] fiduciary makes or expects to make a principal
2 disbursement described in subsection 2 of this section, the [ trustee ] fiduciary may transfer an
3 appropriate amount from income to principal in one or more accounting periods to reimburse
4 principal or [ to ] provide a reserve for future principal disbursements.
5 2. T o the extent a fiduciary has not been and does not expect to be r eimbursed by
6 a third party , principal disbursements to which subsection 1 of this section applies include
7 [ the following, but only to the extent that the trustee has not been and does not expect to be
8 reimbursed by a third party ]:
9 (1) An amount char geable to income but paid from principal because [ it ] income is
10 [ unusually lar ge, including extraordinary repairs ] not sufficient ;
11 (2) [ Disbursements ] The cost of an improvement to principal, whether a change
12 to an existing asset or the construction of a new asset, including a special assessment;
13 (3) A disbursement made to prepare property for rental, including tenant allowances,
14 leasehold improvements, and [ broker's ] commissions;
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15 [ (3) ] (4) A periodic [ payments ] payment on an obligation secured by a principal
16 asset , to the extent [ that ] the amount transferred from income to principal for depreciation is
17 less than the periodic [ payments ] payment ; and
18 [ (4) Disbursements] (5) A disbursement described in [ subdivision (7) of ] subsection
19 1 of section 469.453.
20 3. If [ the ] an asset whose ownership gives rise to [ the disbursements ] a principal
21 disbursement becomes subject to a successive [ income ] interest after an income interest
22 ends, [ a trustee ] the fiduciary may continue to [ transfer amounts from income to principal as
23 provided in ] make transfers under subsection 1 of this section.
469.459. 1. A tax required to be paid by a [ trustee ] fiduciary that is based on
2 receipts allocated to income shall be paid from income.
3 2. A tax required to be paid by a [ trustee ] fiduciary that is based on receipts allocated
4 to principal shall be paid from principal, even if the tax is called an income tax by the taxing
5 authority .
6 3. Subject to subsection 4 of this section and sections 469.456, 469.457, and
7 469.462, a tax required to be paid by a [ trustee ] fiduciary on [ the trust's ] a share of an entity's
8 taxable income in an accounting period shall be paid fro m :
9 (1) [ From ] Income and principal prop ortionately to the [ extent that ] allocation
10 between income and principal of receipts from the entity [ are allocated to income ] in the
11 period ; and
12 (2) [ From ] Principal to the extent [ that ] the tax exceeds the receipts from the entity
13 [ are allocated only to principal ] in the period .
14 4. After applying subsections 1 to 3 of this section, [ the trustee ] a fiduciary shall
15 adjust income or principal receipts , to the extent [ that ] the [ trust's ] taxes the fiduciary pays
16 are reduced because [ the trust receives ] of a deduction for a payment made to a beneficiary .
469.462. 1. A fiduciary may make an adjustment between income and principal
2 to offset the shifting of economic inter ests or tax benefits between curr ent income
3 beneficiaries and successor beneficiaries that arises fr om:
4 (1) An election or decision the fiduciary makes rega rding a tax matter , other
5 than a decision to claim an income tax deduction to which subsection 2 of this section
6 applies;
7 (2) An income tax or other tax imposed on the fiduciary or a beneficiary as a
8 r esult of a transaction involving the fiduciary or a distribution by the fiduciary; or
9 (3) Ownership by the fiduciary of an interes t in an entity , a part of whose taxable
10 income, whether or not distributed, is includable in the taxable income of the fiduciary
11 or a beneficiary .
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12 2. If the amount of an estate tax marital or charitable deduction is redu ced
13 because a fiduciary deducts an amount paid from principal for income tax purposes
14 instead of deducting it for estate tax purposes and, as a res ult, estate taxes paid fr om
15 principal ar e increa sed and income taxes paid by the fiduciary or a beneficiary are
16 decr eased, the fiduciary shall charge each beneficiary that benefits fro m the decr ease in
17 income tax to reim burse the principal from which the incr ease in estate tax is paid. The
18 total reim bursement shall equal the incr ease in the estate tax, to the extent the principal
19 used to pay the incr ease would have qualified for a marital or charitable deduction but
20 for the payment. The share of the reim bursement for each fiduciary or beneficiary
21 whose income taxes are redu ced shall be the same as its shar e of the total decr ease in
22 income tax.
23 3. A fiduciary that charges a beneficiary under subsection 2 of this section may
24 offset the charge by obtaining payment fr om the beneficiary , withholding an amount
25 fr om futur e distributions to the beneficiary , or adopting another method or combination
26 of methods.
469.463. In applying and construing sections [ 469.401 ] 469.399 to [ 469.467 ]
2 469.487 , consideration shall be given to the need to promote uniformity of the law with
3 respect to its subject matter among states that enact it.
469.464. Sections 469.399 to 469.487 modify , limit, or supersede the Electr onic
2 Signatur es in Global and National Commer ce Act, 15 U.S.C. Section 7001 et seq., but do
3 not modify , limit, or supersede 15 U.S.C. Section 7001(c) or authorize electr onic delivery
4 of any of the notices described in 15 U.S.C. Section 7003(b).
469.465. If any provision of sections [ 469.401 ] 469.399 to [ 469.467 ] 469.487 or [ the ]
2 its application [ of these sections ] to any person or circumstance is held invalid, the invalidity
3 does not affect other provisions or applications of sections [ 469.401 ] 469.399 to [ 469.467 ]
4 469.487 which can be given ef fect without the invalid provision or application and to this
5 end, the pro visions of sections 469.399 to 469.487 are severable .
469.467. Sections [ 469.401 ] 469.399 to [ 469.467 ] 469.487 apply to [ every ] a trust or
2 [ decedent's ] estate existing or cre ated on or after August 28, [ 2001 ] 2026 , except as
3 otherwise expressly provided in the [ will or ] terms of the trust or [ in ] sections [ 469.401 ]
4 469.399 to [ 469.467 ] 469.487 .
469.471. As used in sections 469.471 to 469.487, the following terms mean:
2 (1) "Applicable value", the amount of the net fair market value of a trust taken
3 into account under section 469.483;
4 (2) "Expr ess unitrust", a trust for which, under the terms of the trust without
5 r egard to sections 469.471 to 469.487, income or net income shall or may be calculated
6 as a unitrust amount;
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7 (3) "Income trust", a trust that is not a unitrust;
8 (4) "Net fair market value of a trust", the fair market value of the assets of the
9 trust, less the noncontingent liabilities of the trust;
10 (5) "Unitrust", a trust for which net income is a unitrust amount. The term
11 includes an expr ess unitrust;
12 (6) "Unitrust amount", an amount computed by multiplying a determined value
13 of a trust by a determined per centage. For a unitrust administered under a unitrust
14 policy , the term means the applicable value multiplied by the unitrust rate;
15 (7) "Unitrust policy", a policy described in sections 469.479 to 469.487 and
16 adopted under section 469.475;
17 (8) "Unitrust rate", the rate used to compute the unitrust amount for a unitrust
18 administer ed under a unitrust policy .
469.473. 1. Except as otherwise prov ided in subsection 2 of this section, sections
2 469.471 to 469.487 apply to:
3 (1) An income trust, unless the terms of the trust expr essly pro hibit use of
4 sections 469.471 to 469.487 by a specific r efer ence to these sections or an explicit
5 expr ession of intent that net income not be calculated as a unitrust amount; and
6 (2) An expr ess unitrust, except to the extent the terms of the trust explicitly:
7 (a) Pr ohibit use of sections 469.471 to 469.487 by a specific refer ence to such
8 sections;
9 (b) Pr ohibit conversion to an income trust; or
10 (c) Limit changes to the method of calculating the unitrust amount.
11 2. Sections 469.471 to 469.487 do not apply to a trust described in 26 U.S.C.
12 Section 170(f)(2)(B), 642(c)(5), 664(d), 2702(a)(3)(A)(ii) or (iii), or 2702(b), as amended.
13 3. An income trust to which sections 469.471 to 469.487 apply under subdivision
14 (1) of subsection 1 of this section may be converted to a unitrust under sections 469.471
15 to 469.487 r egardless of the terms of the trust concerning distributions. Conversion to a
16 unitrust under sections 469.471 to 469.487 does not affect other terms of the trust
17 concerning distributions of income or principal.
18 4. Sections 469.471 to 469.487 apply to an estate only to the extent a trust is a
19 beneficiary of the estate. T o the extent of the trust’ s interes t in the estate, the estate may
20 be administered as a unitrust, the administration of the estate as a unitrust may be
21 discontinued, or the per centage or method used to calculate the unitrust amount may be
22 changed, in the same manner as for a trust under sections 469.471 to 469.487.
23 5. Sections 469.471 to 469.487 do not cre ate a duty to take or consider action
24 under sections 469.471 to 469.487 or to inform a beneficiary about the applicability of
25 sections 469.471 to 469.487.
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26 6. A fiduciary that in good faith takes or fails to take an action under sections
27 469.471 to 469.487 is not liable to a person affected by the action or inaction.
469.475. 1. A fiduciary , without court appr oval, by complying with subsections 2
2 and 6 of this section, may:
3 (1) Convert an income trust to a unitrust if the fiduciary adopts in a record a
4 unitrust policy for the trust pr oviding:
5 (a) That in administering the trust the net income of the trust will be a unitrust
6 amount rather than net income determined without r egard to sections 469.471 to
7 469.487; and
8 (b) The per centage and method used to calculate the unitrust amount;
9 (2) Change the percen tage or method used to calculate a unitrust amount for a
10 unitrust if the fiduciary adopts in a record a unitrust policy or an amendment or
11 r eplacement of a unitrust policy provi ding changes in the percen tage or method used to
12 calculate the unitrust amount; or
13 (3) Convert a unitrust to an income trust if the fiduciary adopts in a record a
14 determination that, in administering the trust, the net income of the trust will be net
15 income determined without r egard to sections 469.471 to 469.487 rather than a unitrust
16 amount.
17 2. A fiduciary may take an action under subsection 1 of this section if:
18 (1) The fiduciary determines that the action will assist the fiduciary to
19 administer a trust impartially;
20 (2) The fiduciary sends a notice in a re cord, in the manner req uired by section
21 469.477, describing and pro posing to take the action;
22 (3) The fiduciary sends a copy of the notice under subdivision (2) of this
23 subsection to each settlor of the trust that is:
24 (a) If an individual, living; or
25 (b) If not an individual, in existence;
26 (4) At least one member of each class of the qualified beneficiaries described
27 under section 456.1-103 rec eiving the notice under subdivision (2) of this subsection is:
28 (a) If an individual, legally competent;
29 (b) If not an individual, in existence; or
30 (c) Represented in the manner pro vided in subsection 2 of section 469.477; and
31 (5) The fiduciary does not receiv e, by the date specified in the notice under
32 subdivision (5) of subsection 4 of section 469.477, an objection in a rec ord to the action
33 pr oposed under subdivision (2) of this subsection fr om a person to which the notice
34 under subdivision (2) of this subsection is sent.
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35 3. If a fiduciary receives, not later than the date stated in the notice under
36 subdivision (5) of subsection 4 of section 469.477, an objection in a reco rd described in
37 subdivision (4) of subsection 4 of section 469.477 to a pr oposed action, the fiduciary or a
38 beneficiary may request the court to have the pro posed action taken as pr oposed, taken
39 with modifications, or pr evented. A person described in subsection 1 of section 469.477
40 may oppose the pr oposed action in the proceed ing under this subsection, whether or not
41 the person:
42 (1) Consented under subsection 3 of section 469.477; or
43 (2) Objected under subdivision (4) of subsection 4 of section 469.477.
44 4. If, after sending a notice under subdivision (2) of subsection 2 of this section, a
45 fiduciary decides not to take the action pr oposed in the notice, the fiduciary shall notify
46 in a record each person described in subsection 1 of section 469.477 of the decision not to
47 take the action and the reas ons for the decision.
48 5. If a beneficiary request s in a record that a fiduciary take an action described
49 in subsection 1 of this section and the fiduciary declines to act or does not act within
50 ninety days after receiv ing the requ est, the beneficiary may requ est the court to direct
51 the fiduciary to take the action requ ested.
52 6. In deciding whether and how to take an action authorized by subsection 1 of
53 this section, or whether and how to res pond to a req uest by a beneficiary under
54 subsection 5 of this section, a fiduciary shall consider all factors rel evant to the trust and
55 the beneficiaries, including r elevant factors in subsection 5 of section 469.403.
56 7. A fiduciary may rel ease or delegate the power to convert an income trust to a
57 unitrust under subdivision (1) of subsection 1 of this section, change the per centage or
58 method used to calculate a unitrust amount under subdivision (2) of subsection 1 of this
59 section, or convert a unitrust to an income trust under subdivision (3) of subsection 1 of
60 this section, for a r eason described in subsection 7 of section 469.405 and in the manner
61 described in subsection 8 of section 469.405.
469.477. 1. A notice r equir ed by subdivision (3) of subsection 2 of section
2 469.475 shall be sent in a manner authorized under section 456.1-109 to:
3 (1) The qualified beneficiaries defined under section 456.1-103;
4 (2) Each person acting as trust pro tector under section 456.8-808; and
5 (3) Each person that is granted a power over the trust by the terms of the trust,
6 to the extent the power is exer cisable when the person is not then serving as a trustee:
7 (a) Including a:
8 a. Power over the investment, management, or distribution of trust prop erty or
9 other matters of trust administration; and
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10 b. Power to appoint or rem ove a trustee or person described in this paragraph;
11 and
12 (b) Excluding a:
13 a. Power of appointment;
14 b. Power of a beneficiary over the trust, to the extent the exer cise or nonexercis e
15 of the power affects the beneficial interes t of the beneficiary or another beneficiary
16 r epresent ed by the beneficiary under sections 456.3-301 to 456.3-305 with respect to the
17 exer cise or nonexerci se of the power; and
18 c. Power over the trust if the terms of the trust pr ovide that the power is held in
19 a nonfiduciary capacity and the power shall be held in a nonfiduciary capacity to
20 achieve a tax objective under T itle 26 of the United States Code, as amended.
21 2. The repr esentation pro visions of sections 456.3-301 to 456.3-305 apply to
22 notice under this section.
23 3. A person may consent in a record at any time to action prop osed under
24 subdivision (2) of subsection 2 of section 469.475. A notice r equir ed by subdivision (2) of
25 subsection 2 of section 469.475 need not be sent to a person that consents under this
26 subsection.
27 4. A notice r equir ed by subdivision (2) of subsection 2 of section 469.475 shall
28 include:
29 (1) The action pr oposed under subdivision (2) of subsection 2 of section 469.475;
30 (2) For a conversion of an income trust to a unitrust, a copy of the unitrust policy
31 adopted under subdivision (1) of subsection 1 of section 469.475;
32 (3) For a change in the per centage or method used to calculate the unitrust
33 amount, a copy of the unitrust policy or amendment or rep lacement of the unitrust
34 policy adopted under subdivision (2) of subsection 1 of section 469.475;
35 (4) A statement that the person to which the notice is sent may object to the
36 pr oposed action by stating in a record the basis for the objection and sending or
37 delivering the record to the fiduciary;
38 (5) The date by which an objection under subdivision (4) of this subsection shall
39 be re ceived by the fiduciary , which shall be at least thirty days after the date the notice is
40 sent;
41 (6) The date on which the action is pro posed to be taken and the date on which
42 the action is pro posed to take effect;
43 (7) The name and contact information of the fiduciary; and
44 (8) The name and contact information of a person that may be contacted for
45 additional information.
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469.479. 1. In administering a unitrust under sections 469.471 to 469.487, a
2 fiduciary shall follow a unitrust policy adopted under subdivision (1) or (2) of subsection
3 1 of section 469.475 or amended or r eplaced under subdivision (2) of section 1 of section
4 469.475.
5 2. A unitrust policy shall pro vide:
6 (1) The unitrust rate or the method for determining the unitrust rate under
7 section 469.481;
8 (2) The method for determining the applicable value under section 469.483; and
9 (3) The rules described in sections 469.481 to 469.487 that apply in the
10 administration of the unitrust, whether the rules are:
11 (a) Mandatory , as pr ovided in subsection 1 of section 469.483 and subsection 1 of
12 section 469.485; or
13 (b) Optional, as provi ded in section 469.481, subsection 2 of section 469.483,
14 subsection 2 of section 469.485, and subsection 1 of section 469.487, to the extent the
15 fiduciary elects to adopt such rules.
469.481. 1. Except as otherwise prov ided in subdivision (1) of subsection 2 of
2 section 469.487, a unitrust rate may be:
3 (1) A fixed unitrust rate; or
4 (2) A unitrust rate that is determined for each period using:
5 (a) A market index or other published data; or
6 (b) A mathematical blend of market indices or other published data over a
7 stated number of preced ing periods.
8 2. Except as otherwise pr ovided in subdivision (1) of subsection 2 of section
9 469.487, a unitrust policy may pro vide:
10 (1) A limit on how high the unitrust rate determined under subdivision (2) of
11 subsection 1 of this section may rise;
12 (2) A limit on how low the unitrust rate determined under subdivision (2) of
13 subsection 1 of this section may fall;
14 (3) A limit on how much the unitrust rate determined under subdivision (2) of
15 subsection 1 of this section may incr ease over the unitrust rate for the preced ing period
16 or a mathematical blend of unitrust rates over a stated number of pr eceding periods;
17 (4) A limit on how much the unitrust rate determined under subdivision (2) of
18 subsection 1 of this section may decr ease below the unitrust rate for the pr eceding
19 period or a mathematical blend of unitrust rates over a stated number of pr eceding
20 periods; or
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21 (5) A mathematical blend of any of the unitrust rates determined under
22 subdivision (2) of subsection 1 of this section and subdivisions (1) to (4) of this
23 subsection.
469.483. 1. A unitrust policy shall pr ovide the method for determining the fair
2 market value of an asset for the purpose of determining the unitrust amount, including:
3 (1) The fr equency of valuing the asset, which need not req uire a valuation in
4 every period; and
5 (2) The date for valuing the asset in each period in which the asset is valued.
6 2. Except as otherwise pr ovided in subdivision (2) of subsection 2 of section
7 469.487, a unitrust policy may pr ovide methods for determining the amount of the net
8 fair market value of the trust to take into account in determining the applicable value,
9 including:
10 (1) Obtaining an appraisal of an asset for which fair market value is not readi ly
11 available;
12 (2) Exclusion of specific assets or gr oups or types of assets;
13 (3) Other exceptions or modifications of the tr eatment of specific assets or
14 gr oups or types of assets;
15 (4) Identification and tr eatment of cash or pr operty held for distribution;
16 (5) Use of:
17 (a) An average of fair market values over a stated number of pr eceding periods;
18 or
19 (b) Another mathematical blend of fair market values over a stated number of
20 pr eceding periods;
21 (6) A limit on how much the applicable value of all assets, gro ups of assets, or
22 individual assets may incr ease over:
23 (a) The corr esponding applicable value for the preced ing period; or
24 (b) A mathematical blend of applicable values over a stated number of pr eceding
25 periods;
26 (7) A limit on how much the applicable value of all assets, gro ups of assets, or
27 individual assets may decrea se below:
28 (a) The corr esponding applicable value for the preced ing period; or
29 (b) A mathematical blend of applicable values over a stated number of pr eceding
30 periods;
31 (8) The tr eatment of accrued income and other features of an asset that affect
32 value; and
33 (9) Determining the liabilities of the trust, including tr eatment of liabilities to
34 conform with the tr eatment of assets under subdivisions (1) to (8) of this subsection.
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469.485. 1. A unitrust policy shall pr ovide the period used under sections
2 469.481 and 469.483. Except as otherwise pro vided in subdivision (3) of subsection 2 of
3 section 469.481, the period may be:
4 (1) A calendar year;
5 (2) A twelve-month period other than a calendar year;
6 (3) A calendar quarter;
7 (4) A thr ee-month period other than a calendar quarter; or
8 (5) Another period.
9 2. Except as otherwise pro vided in subsection 2 of section 469.487, a unitrust
10 policy may pr ovide standards for:
11 (1) Using fewer preced ing periods under paragraph (b) of subdivision (2) of
12 subsection 1 of section 469.481 or subdivision (3) or (4) of subsection 2 of section 469.481
13 if:
14 (a) The trust was not in existence in a pr eceding period; or
15 (b) Market indices or other published data ar e not available for a pr eceding
16 period;
17 (2) Using fewer preced ing periods under paragraph (a) or (b) of subdivision (5)
18 of subsection 2 of section 469.483, paragraph (b) of subdivision (6) of subsection 2 of
19 section 469.483, or paragraph (b) of subdivision (7) of subsection 2 of section 469.483 if:
20 (a) The trust was not in existence in a pr eceding period; or
21 (b) Fair market values ar e not available for a preced ing period; and
22 (3) Pr orating the unitrust amount on a daily basis for a part of a period in which
23 the trust or the administration of the trust as a unitrust or the interes t of any beneficiary
24 commences or terminates.
469.487. 1. A unitrust policy may:
2 (1) Pr ovide methods and standards for:
3 (a) Determining the timing of distributions;
4 (b) Making distributions in cash or in kind or partly in cash and partly in kind;
5 or
6 (c) Corr ecting an underpayment or overpayment to a beneficiary based on the
7 unitrust amount if ther e is an err or in calculating the unitrust amount;
8 (2) Specify sources and the order of sources , including categories of income for
9 federal income tax purposes, fr om which distributions of a unitrust amount ar e paid; or
10 (3) Pro vide other standards and rules the fiduciary determines serve the
11 inter ests of the beneficiaries.
12 2. If a trust qualifies for a special tax benefit or a fiduciary is not an independent
13 person:
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14 (1) The unitrust rate established under section 469.481 shall not be less than
15 thr ee per cent or mor e than five per cent;
16 (2) The only prov isions of section 469.483 that apply are subsection 1 of section
17 469.483; subdivisions (1), (4), and (9) of subsection 2 of section 469.483; and paragraph
18 (a) of subdivision (5) of subsection 2 of section 469.483;
19 (3) The only period that may be used under section 469.485 is a calendar year
20 under subdivision (1) of subsection 1 of section 469.485; and
21 (4) The only other pr ovisions of section 469.485 that apply ar e paragraph (a) of
22 subdivision (2) of subsection 2 of section 469.485 and subdivision (3) of subsection 2 of
23 section 469.485.
[ 469.409 . 1. Any claim for breach of a trustee's duty to impartially
2 administer a trust related, directly or indirectly , to an adjustment made by a
3 fiduciary to the allocation between principal and income pursuant to
4 subsection 1 of section 469.405 or any allocation made by the fiduciary
5 pursuant to any authority or discretion specified in subsection 1 of section
6 469.403, unless previously barred by adjudication, consent or other limitation,
7 shall be barred as provided in this section.
8 (1) Any such claim brought by a qualified beneficiary is barred if not
9 asserted in a judicial proceeding commenced within two years after the trustee
10 has sent a report to that qualified beneficiary that adequately discloses the facts
11 constituting the claim.
12 (2) Any such claim brought by a beneficiary (other than a qualified
13 beneficiary) with any interest whatsoever in the trust, no matter how remote or
14 contingent, or whether or not the beneficiary is ascertainable or has the
15 capacity to contract, is barred if not asserted in a judicial proceeding
16 commenced within two years after the first to occur of:
17 (a) The date the trustee sent a report to all qualified beneficiaries that
18 adequately discloses the facts constituting the claim; or
19 (b) The date the trustee sent a report to a person that represents the
20 beneficiary under the provisions of subdivision (2) of subsection 2 of this
21 section.
22 2. For purposes of this section the following rules shall apply:
23 (1) A report adequately discloses the facts constituting a claim if it
24 provides suff icient information so that the beneficiary should know of the
25 claim or reasonably should have inquired into its existence;
26 (2) Section 469.402 shall apply in determining whether a beneficiary
27 (including a qualified beneficiary) has received notice for purposes of this
28 section;
29 (3) The determination of the identity of all qualified beneficiaries shall
30 be made on the date the report is deemed to have been sent; and
31 (4) This section does not preclude an action to recover for fraud or
32 misrepresentation related to the report. ]
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[ 469.41 1 . 1. (1) If the provisions of this section apply to a trust, the
2 unitrust amount determined for each accounting year of the trust shall be a
3 percentage between three and five percent of the average net fair market value
4 of the trust, as of the first day of the trust's current accounting year . The
5 percentage applicable to a trust shall be that percentage specified by the terms
6 of the governing instrument or by the election made in accordance with
7 subdivision (2) of subsection 5 of this section.
8 (2) The unitrust amount for the current accounting year computed
9 pursuant to this section shall be proportionately reduced for any distributions,
10 in whole or in part, other than distributions of the unitrust amount, and for any
11 payments of expenses, including debts, disbursements and taxes, from the trust
12 within a current accounting year that the trustee determines to be material and
13 substantial, and shall be proportionately increased for the receipt, other than a
14 receipt that represents a return on investment, of any additional property into
15 the trust within a current accounting year .
16 (3) For purposes of this section, the net fair market values of the assets
17 held in the trust on the first business day of a prior accounting quarter shall be
18 adjusted to reflect any reduction, in the case of a distribution or payment, or
19 increase, in the case of a receipt, for the prior accounting year pursuant to
20 subdivision (1) of this subsection, as if the distribution, payment or receipt had
21 occurred on the first day of the prior accounting year .
22 (4) In the case of a short accounting period, the trustee shall prorate
23 the unitrust amount on a daily basis.
24 (5) In the case where the net fair market value of an asset held in the
25 trust has been incorrectly determined in any quarter , the unitrust amount shall
26 be increased in the case of an undervaluation, or be decreased in the case of an
27 overvaluation, by an amount equal to the dif ference between the unitrust
28 amount determined based on the correct valuation of the asset and the unitrust
29 amount originally determined.
30 2. As used in this section, the following terms mean:
31 (1) "A verage net fair market value", a rolling average of the fair
32 market value of the assets held in the trust on the first business day of the
33 lessor of the number of accounting quarters of the trust from the date of
34 inception of the trust to the determination of the trust's average net fair market
35 value, or twelve accounting quarters of the trust, regardless of whether this
36 section applied to the ascertainment of net income for all valuation quarters;
37 (2) "Current accounting year", the accounting period of the trust for
38 which the unitrust amount is being determined.
39 3. In determining the average net fair market value of the assets held in
40 the trust, there shall not be included the value of:
41 (1) Any residential property or any tangible personal property that, as
42 of the first business day of the current valuation year , one or more income
43 beneficiaries of the trust have or had the right to occupy , or have or had the
44 right to possess or control, other than in a capacity as trustee, and instead the
45 right of occupancy or the right to possession or control shall be deemed to be
46 the unitrust amount with respect to the residential property or the tangible
47 personal property; or
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48 (2) Any asset specifically given to a beneficiary under the terms of the
49 trust and the return on investment on that asset, which return on investment
50 shall be distributable to the beneficiary .
51 4. In determining the average net fair market value of the assets held in
52 the trust pursuant to subsection 1 of this section, the trustee shall, not less often
53 than annually , determine the fair market value of each asset of the trust that
54 consists primarily of real property or other property that is not traded on a
55 regular basis in an active market by appraisal or other reasonable method or
56 estimate, and that determination, if made reasonably and in good faith, shall be
57 conclusive as to all persons interested in the trust. Any claim based on a
58 determination made pursuant to this subsection shall be barred if not asserted
59 in a judicial proceeding brought by any beneficiary with any interest
60 whatsoever in the trust within two years after the trustee has sent a report to all
61 qualified beneficiaries that adequately discloses the facts constituting the
62 claim. The rules set forth in subsection 2 of section 469.409 shall apply to the
63 barring of claims pursuant to this subsection.
64 5. This section shall apply to the following trusts:
65 (1) Any trust created after August 28, 2001, with respect to which the
66 terms of the trust clearly manifest an intent that this section apply;
67 (2) Any trust created under an instrument that became irrevocable on,
68 before, or after August 28, 2001, if the trustee, in the trustee's discretion, elects
69 to have this section apply unless the instrument creating the trust specifically
70 prohibits an election under this subdivision. The trustee shall deliver notice to
71 all qualified beneficiaries and the settlor of the trust, if he or she is then living,
72 of the trustee's intent to make such an election at least sixty days before
73 making that election. The trustee shall have sole authority to make the
74 election. Section 469.402 shall apply for all purposes of this subdivision. An
75 action or order by any court shall not be required. The election shall be made
76 by a signed writing delivered to the settlor of the trust, if he or she is then
77 living, and to all qualified beneficiaries. The election is irrevocable, unless
78 revoked by order of the court having jurisdiction of the trust. The election
79 may specify the percentage used to determine the unitrust amount pursuant to
80 this section, provided that such percentage is between three and five percent,
81 or if no percentage is specified, then that percentage shall be three percent. In
82 making an election pursuant to this subsection, the trustee shall be subject to
83 the same limitations and conditions as apply to an adjustment between income
84 and principal pursuant to subsections 3 and 4 of section 469.405; and
85 (3) No action of any kind based on an election made by a trustee
86 pursuant to subdivision (2) of this subsection shall be brought against the
87 trustee by any beneficiary of that trust three years from the ef fective date of
88 that election.
89 6. (1) Once the provisions of this section become applicable to a trust,
90 the net income of the trust shall be the unitrust amount.
91 (2) Unless otherwise provided by the governing instrument, the
92 unitrust amount distributed each year shall be paid from the following sources
93 for that year up to the full value of the unitrust amount in the following order:
94 (a) Net income as determined if the trust were not a unitrust;
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95 (b) Other ordinary income as determined for federal income tax
96 purposes;
97 (c) Assets of the trust principal for which there is a readily available
98 market value; and
99 (d) Other trust principal.
100 (3) Additionally , the trustee may allocate to trust income for each
101 taxable year of the trust, or portion thereof:
102 (a) Net short-term capital gain described in the Internal Revenue Code,
103 26 U.S.C. Section 1222(5), for such year , or portion thereof, but only to the
104 extent that the amount so allocated together with all other amounts to trust
105 income, as determined under the provisions of this chapter without regard to
106 this section, for such year , or portion thereof, does not exceed the unitrust
107 amount for such year , or portion thereof;
108 (b) Net long-term capital gain described in the Internal Revenue Code,
109 26 U.S.C. Section 1222(7), for such year , or portion thereof, but only to the
110 extent that the amount so allocated together with all other amounts, including
111 amounts described in paragraph (a) of this subdivision, allocated to trust
112 income for such year , or portion thereof, does not exceed the unitrust amount
113 for such year , or portion thereof.
114 7. A trust with respect to which this section applies on August 28,
115 201 1, may calculate the unitrust amount in accordance with the provisions of
116 this section, as it existed either before or after such date, as the trustee of such
117 trust shall determine in a writing kept with the records of the trust in the
118 trustee's discretion. ]
[ 469.461 . 1. A fiduciary may make adjustments between principal and
2 income to of fset the shifting of economic interests or tax benefits between
3 income beneficiaries and remainder beneficiaries which arise from:
4 (1) Elections and decisions, other than those described in subsection 2
5 of this section, that the fiduciary makes from time to time regarding tax
6 matters;
7 (2) An income tax or any other tax that is imposed upon the fiduciary
8 or a beneficiary as a result of a transaction involving or a distribution from the
9 estate or trust; or
10 (3) The ownership by an estate or trust of an interest in an entity whose
11 taxable income, whether or not distributed, is includable in the taxable income
12 of the estate, trust or a beneficiary .
13 2. If the amount of an estate tax marital deduction or charitable
14 contribution deduction is reduced because a fiduciary deducts an amount paid
15 from principal for income tax purposes instead of deducting it for estate tax
16 purposes, and as a result estate taxes paid from principal are increased and
17 income taxes paid by an estate, trust or beneficiary are decreased, each estate,
18 trust or beneficiary that benefits from the decrease in income tax shall
19 reimburse the principal from which the increase in estate tax is paid. The total
20 reimbursement shall equal the increase in the estate tax to the extent that the
21 principal used to pay the increase would have qualified for a marital deduction
22 or charitable contribution deduction but for the payment. The proportionate
23 share of the reimbursement for each estate, trust or beneficiary whose income
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24 taxes are reduced shall be the same as its proportionate share of the total
25 decrease in income tax. An estate or trust shall reimburse principal from
26 income. ]
✔
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