CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 1159Introduced by Senator JonesFebruary 17, 2022 An act to repeal and add Chapter 3 (commencing with Section 16320) of Part 4 of Division 9 of the Probate Code, relating to trusts and estates. LEGISLATIVE COUNSEL'S DIGESTSB 1159, as introduced, Jones. Uniform Fiduciary Income and Principal Act.Existing law, the Uniform Principal and Income Act, generally directs a trustee how to allocate money to beneficiaries of an estate or trust as either principal or income.This bill would repeal the Uniform Principal and Income Act, and would replace it with the Uniform Fiduciary Income and Principal Act, for similar purposes, and would define relevant terminology in this regard.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Chapter 3 (commencing with Section 16320) of Part 4 of Division 9 of the Probate Code is repealed.SEC. 2. Chapter 3 (commencing with Section 16320) is added to Part 4 of Division 9 of the Probate Code, to read: CHAPTER 3. Uniform Fiduciary Income and Principal Act Article 1. Short Title and Definitions16320. This section shall be known, and may be cited, as the Uniform Fiduciary Income and Principal Act.16321. The following definitions apply for purposes of this chapter:(a) Accounting period means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.(b) Asset-backed security means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section ____, ____, or ____ applies.(c) Beneficiary includes the following:(1) For a trust:(A) A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.(B) A remainder beneficiary.(C) Any other successor beneficiary.(2) For an estate, an heir, legatee, and devisee.(3) For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other interest following a life estate or term interest.(d) Court means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in Section ____. (e) Current income beneficiary means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.(f) Distribution means a payment or transfer by a fiduciary to a beneficiary in the beneficiarys capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiarys right to receive the payment or transfer under the terms of the trust. Distribute, distributed, and distributee have corresponding meanings.(g) Estate means a decedents estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.(h) Fiduciary includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. Fiduciary includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.(i) Income means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 (commencing with Section ____).(j) Income interest means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciarys discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.(k) Independent person means a person that is not:(1) For a trust, any of the following:(A) A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees of trust income or principal were terminated, assuming no power of appointment is exercised.(B) A settlor of the trust.(C) An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.(2) For an estate, a beneficiary.(3) A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).(4) A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.(5) An employee of a person described in paragraphs (1) to (4), inclusive.(l) Mandatory income interest means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.(m) Net income means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section ____), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section ____. The term does not include an adjustment from income to principal under Section____.(n) Person means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.(o) Personal representative means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the persons status.(p) Principal means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.(q) Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.(r) Settlor means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that persons contribution, except to the extent another person has the power to revoke or withdraw that portion.(s) Special tax benefit means any of the following:(1) Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.(2) Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(a)(1), as amended).(3) An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlors spouse to receive the net income of the trust.(4) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:(A) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(B) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(C) An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:(i) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(ii) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(t) Successive interest means the interest of a successor beneficiary.(u) Successor beneficiary means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.(v) Terms of a trust means any of the following:(1) (A) For a trust, the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlors death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor.(B) Terms of a trust includes, but is not limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust.(C) Terms of a trust does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, terms of a trust does not include trust instruments or amendments that are superseded by the last restatement before the settlors death, but it does include amendments executed after the restatement. Terms of a trust also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.(2) For an estate, a will.(3) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.(w) (1) Trust includes both of the following:(A) An express trust, private or charitable, with additions to the trust, wherever and however created.(B) A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.(2) Trust does not include any of the following:(A) A constructive trust.(B) A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.(C) An arrangement under which a person is a nominee, escrowee, or agent for another.(x) Trustee means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.(y) Will means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individuals property, effective at the individuals death. Will includes a codicil or other amendment to a testamentary instrument.
CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 1159Introduced by Senator JonesFebruary 17, 2022 An act to repeal and add Chapter 3 (commencing with Section 16320) of Part 4 of Division 9 of the Probate Code, relating to trusts and estates. LEGISLATIVE COUNSEL'S DIGESTSB 1159, as introduced, Jones. Uniform Fiduciary Income and Principal Act.Existing law, the Uniform Principal and Income Act, generally directs a trustee how to allocate money to beneficiaries of an estate or trust as either principal or income.This bill would repeal the Uniform Principal and Income Act, and would replace it with the Uniform Fiduciary Income and Principal Act, for similar purposes, and would define relevant terminology in this regard.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO
CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION
Senate Bill
No. 1159
Introduced by Senator JonesFebruary 17, 2022
Introduced by Senator Jones
February 17, 2022
An act to repeal and add Chapter 3 (commencing with Section 16320) of Part 4 of Division 9 of the Probate Code, relating to trusts and estates.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
SB 1159, as introduced, Jones. Uniform Fiduciary Income and Principal Act.
Existing law, the Uniform Principal and Income Act, generally directs a trustee how to allocate money to beneficiaries of an estate or trust as either principal or income.This bill would repeal the Uniform Principal and Income Act, and would replace it with the Uniform Fiduciary Income and Principal Act, for similar purposes, and would define relevant terminology in this regard.
Existing law, the Uniform Principal and Income Act, generally directs a trustee how to allocate money to beneficiaries of an estate or trust as either principal or income.
This bill would repeal the Uniform Principal and Income Act, and would replace it with the Uniform Fiduciary Income and Principal Act, for similar purposes, and would define relevant terminology in this regard.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Chapter 3 (commencing with Section 16320) of Part 4 of Division 9 of the Probate Code is repealed.SEC. 2. Chapter 3 (commencing with Section 16320) is added to Part 4 of Division 9 of the Probate Code, to read: CHAPTER 3. Uniform Fiduciary Income and Principal Act Article 1. Short Title and Definitions16320. This section shall be known, and may be cited, as the Uniform Fiduciary Income and Principal Act.16321. The following definitions apply for purposes of this chapter:(a) Accounting period means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.(b) Asset-backed security means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section ____, ____, or ____ applies.(c) Beneficiary includes the following:(1) For a trust:(A) A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.(B) A remainder beneficiary.(C) Any other successor beneficiary.(2) For an estate, an heir, legatee, and devisee.(3) For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other interest following a life estate or term interest.(d) Court means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in Section ____. (e) Current income beneficiary means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.(f) Distribution means a payment or transfer by a fiduciary to a beneficiary in the beneficiarys capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiarys right to receive the payment or transfer under the terms of the trust. Distribute, distributed, and distributee have corresponding meanings.(g) Estate means a decedents estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.(h) Fiduciary includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. Fiduciary includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.(i) Income means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 (commencing with Section ____).(j) Income interest means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciarys discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.(k) Independent person means a person that is not:(1) For a trust, any of the following:(A) A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees of trust income or principal were terminated, assuming no power of appointment is exercised.(B) A settlor of the trust.(C) An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.(2) For an estate, a beneficiary.(3) A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).(4) A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.(5) An employee of a person described in paragraphs (1) to (4), inclusive.(l) Mandatory income interest means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.(m) Net income means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section ____), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section ____. The term does not include an adjustment from income to principal under Section____.(n) Person means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.(o) Personal representative means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the persons status.(p) Principal means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.(q) Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.(r) Settlor means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that persons contribution, except to the extent another person has the power to revoke or withdraw that portion.(s) Special tax benefit means any of the following:(1) Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.(2) Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(a)(1), as amended).(3) An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlors spouse to receive the net income of the trust.(4) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:(A) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(B) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(C) An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:(i) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(ii) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(t) Successive interest means the interest of a successor beneficiary.(u) Successor beneficiary means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.(v) Terms of a trust means any of the following:(1) (A) For a trust, the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlors death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor.(B) Terms of a trust includes, but is not limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust.(C) Terms of a trust does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, terms of a trust does not include trust instruments or amendments that are superseded by the last restatement before the settlors death, but it does include amendments executed after the restatement. Terms of a trust also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.(2) For an estate, a will.(3) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.(w) (1) Trust includes both of the following:(A) An express trust, private or charitable, with additions to the trust, wherever and however created.(B) A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.(2) Trust does not include any of the following:(A) A constructive trust.(B) A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.(C) An arrangement under which a person is a nominee, escrowee, or agent for another.(x) Trustee means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.(y) Will means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individuals property, effective at the individuals death. Will includes a codicil or other amendment to a testamentary instrument.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Chapter 3 (commencing with Section 16320) of Part 4 of Division 9 of the Probate Code is repealed.
SECTION 1. Chapter 3 (commencing with Section 16320) of Part 4 of Division 9 of the Probate Code is repealed.
### SECTION 1.
SEC. 2. Chapter 3 (commencing with Section 16320) is added to Part 4 of Division 9 of the Probate Code, to read: CHAPTER 3. Uniform Fiduciary Income and Principal Act Article 1. Short Title and Definitions16320. This section shall be known, and may be cited, as the Uniform Fiduciary Income and Principal Act.16321. The following definitions apply for purposes of this chapter:(a) Accounting period means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.(b) Asset-backed security means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section ____, ____, or ____ applies.(c) Beneficiary includes the following:(1) For a trust:(A) A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.(B) A remainder beneficiary.(C) Any other successor beneficiary.(2) For an estate, an heir, legatee, and devisee.(3) For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other interest following a life estate or term interest.(d) Court means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in Section ____. (e) Current income beneficiary means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.(f) Distribution means a payment or transfer by a fiduciary to a beneficiary in the beneficiarys capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiarys right to receive the payment or transfer under the terms of the trust. Distribute, distributed, and distributee have corresponding meanings.(g) Estate means a decedents estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.(h) Fiduciary includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. Fiduciary includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.(i) Income means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 (commencing with Section ____).(j) Income interest means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciarys discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.(k) Independent person means a person that is not:(1) For a trust, any of the following:(A) A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees of trust income or principal were terminated, assuming no power of appointment is exercised.(B) A settlor of the trust.(C) An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.(2) For an estate, a beneficiary.(3) A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).(4) A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.(5) An employee of a person described in paragraphs (1) to (4), inclusive.(l) Mandatory income interest means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.(m) Net income means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section ____), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section ____. The term does not include an adjustment from income to principal under Section____.(n) Person means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.(o) Personal representative means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the persons status.(p) Principal means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.(q) Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.(r) Settlor means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that persons contribution, except to the extent another person has the power to revoke or withdraw that portion.(s) Special tax benefit means any of the following:(1) Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.(2) Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(a)(1), as amended).(3) An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlors spouse to receive the net income of the trust.(4) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:(A) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(B) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(C) An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:(i) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(ii) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(t) Successive interest means the interest of a successor beneficiary.(u) Successor beneficiary means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.(v) Terms of a trust means any of the following:(1) (A) For a trust, the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlors death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor.(B) Terms of a trust includes, but is not limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust.(C) Terms of a trust does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, terms of a trust does not include trust instruments or amendments that are superseded by the last restatement before the settlors death, but it does include amendments executed after the restatement. Terms of a trust also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.(2) For an estate, a will.(3) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.(w) (1) Trust includes both of the following:(A) An express trust, private or charitable, with additions to the trust, wherever and however created.(B) A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.(2) Trust does not include any of the following:(A) A constructive trust.(B) A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.(C) An arrangement under which a person is a nominee, escrowee, or agent for another.(x) Trustee means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.(y) Will means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individuals property, effective at the individuals death. Will includes a codicil or other amendment to a testamentary instrument.
SEC. 2. Chapter 3 (commencing with Section 16320) is added to Part 4 of Division 9 of the Probate Code, to read:
### SEC. 2.
CHAPTER 3. Uniform Fiduciary Income and Principal Act Article 1. Short Title and Definitions16320. This section shall be known, and may be cited, as the Uniform Fiduciary Income and Principal Act.16321. The following definitions apply for purposes of this chapter:(a) Accounting period means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.(b) Asset-backed security means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section ____, ____, or ____ applies.(c) Beneficiary includes the following:(1) For a trust:(A) A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.(B) A remainder beneficiary.(C) Any other successor beneficiary.(2) For an estate, an heir, legatee, and devisee.(3) For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other interest following a life estate or term interest.(d) Court means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in Section ____. (e) Current income beneficiary means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.(f) Distribution means a payment or transfer by a fiduciary to a beneficiary in the beneficiarys capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiarys right to receive the payment or transfer under the terms of the trust. Distribute, distributed, and distributee have corresponding meanings.(g) Estate means a decedents estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.(h) Fiduciary includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. Fiduciary includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.(i) Income means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 (commencing with Section ____).(j) Income interest means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciarys discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.(k) Independent person means a person that is not:(1) For a trust, any of the following:(A) A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees of trust income or principal were terminated, assuming no power of appointment is exercised.(B) A settlor of the trust.(C) An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.(2) For an estate, a beneficiary.(3) A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).(4) A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.(5) An employee of a person described in paragraphs (1) to (4), inclusive.(l) Mandatory income interest means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.(m) Net income means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section ____), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section ____. The term does not include an adjustment from income to principal under Section____.(n) Person means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.(o) Personal representative means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the persons status.(p) Principal means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.(q) Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.(r) Settlor means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that persons contribution, except to the extent another person has the power to revoke or withdraw that portion.(s) Special tax benefit means any of the following:(1) Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.(2) Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(a)(1), as amended).(3) An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlors spouse to receive the net income of the trust.(4) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:(A) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(B) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(C) An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:(i) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(ii) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(t) Successive interest means the interest of a successor beneficiary.(u) Successor beneficiary means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.(v) Terms of a trust means any of the following:(1) (A) For a trust, the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlors death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor.(B) Terms of a trust includes, but is not limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust.(C) Terms of a trust does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, terms of a trust does not include trust instruments or amendments that are superseded by the last restatement before the settlors death, but it does include amendments executed after the restatement. Terms of a trust also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.(2) For an estate, a will.(3) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.(w) (1) Trust includes both of the following:(A) An express trust, private or charitable, with additions to the trust, wherever and however created.(B) A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.(2) Trust does not include any of the following:(A) A constructive trust.(B) A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.(C) An arrangement under which a person is a nominee, escrowee, or agent for another.(x) Trustee means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.(y) Will means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individuals property, effective at the individuals death. Will includes a codicil or other amendment to a testamentary instrument.
CHAPTER 3. Uniform Fiduciary Income and Principal Act Article 1. Short Title and Definitions16320. This section shall be known, and may be cited, as the Uniform Fiduciary Income and Principal Act.16321. The following definitions apply for purposes of this chapter:(a) Accounting period means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.(b) Asset-backed security means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section ____, ____, or ____ applies.(c) Beneficiary includes the following:(1) For a trust:(A) A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.(B) A remainder beneficiary.(C) Any other successor beneficiary.(2) For an estate, an heir, legatee, and devisee.(3) For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other interest following a life estate or term interest.(d) Court means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in Section ____. (e) Current income beneficiary means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.(f) Distribution means a payment or transfer by a fiduciary to a beneficiary in the beneficiarys capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiarys right to receive the payment or transfer under the terms of the trust. Distribute, distributed, and distributee have corresponding meanings.(g) Estate means a decedents estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.(h) Fiduciary includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. Fiduciary includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.(i) Income means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 (commencing with Section ____).(j) Income interest means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciarys discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.(k) Independent person means a person that is not:(1) For a trust, any of the following:(A) A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees of trust income or principal were terminated, assuming no power of appointment is exercised.(B) A settlor of the trust.(C) An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.(2) For an estate, a beneficiary.(3) A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).(4) A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.(5) An employee of a person described in paragraphs (1) to (4), inclusive.(l) Mandatory income interest means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.(m) Net income means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section ____), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section ____. The term does not include an adjustment from income to principal under Section____.(n) Person means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.(o) Personal representative means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the persons status.(p) Principal means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.(q) Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.(r) Settlor means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that persons contribution, except to the extent another person has the power to revoke or withdraw that portion.(s) Special tax benefit means any of the following:(1) Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.(2) Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(a)(1), as amended).(3) An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlors spouse to receive the net income of the trust.(4) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:(A) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(B) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(C) An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:(i) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(ii) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(t) Successive interest means the interest of a successor beneficiary.(u) Successor beneficiary means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.(v) Terms of a trust means any of the following:(1) (A) For a trust, the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlors death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor.(B) Terms of a trust includes, but is not limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust.(C) Terms of a trust does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, terms of a trust does not include trust instruments or amendments that are superseded by the last restatement before the settlors death, but it does include amendments executed after the restatement. Terms of a trust also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.(2) For an estate, a will.(3) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.(w) (1) Trust includes both of the following:(A) An express trust, private or charitable, with additions to the trust, wherever and however created.(B) A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.(2) Trust does not include any of the following:(A) A constructive trust.(B) A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.(C) An arrangement under which a person is a nominee, escrowee, or agent for another.(x) Trustee means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.(y) Will means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individuals property, effective at the individuals death. Will includes a codicil or other amendment to a testamentary instrument.
CHAPTER 3. Uniform Fiduciary Income and Principal Act
CHAPTER 3. Uniform Fiduciary Income and Principal Act
Article 1. Short Title and Definitions16320. This section shall be known, and may be cited, as the Uniform Fiduciary Income and Principal Act.16321. The following definitions apply for purposes of this chapter:(a) Accounting period means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.(b) Asset-backed security means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section ____, ____, or ____ applies.(c) Beneficiary includes the following:(1) For a trust:(A) A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.(B) A remainder beneficiary.(C) Any other successor beneficiary.(2) For an estate, an heir, legatee, and devisee.(3) For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other interest following a life estate or term interest.(d) Court means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in Section ____. (e) Current income beneficiary means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.(f) Distribution means a payment or transfer by a fiduciary to a beneficiary in the beneficiarys capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiarys right to receive the payment or transfer under the terms of the trust. Distribute, distributed, and distributee have corresponding meanings.(g) Estate means a decedents estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.(h) Fiduciary includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. Fiduciary includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.(i) Income means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 (commencing with Section ____).(j) Income interest means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciarys discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.(k) Independent person means a person that is not:(1) For a trust, any of the following:(A) A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees of trust income or principal were terminated, assuming no power of appointment is exercised.(B) A settlor of the trust.(C) An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.(2) For an estate, a beneficiary.(3) A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).(4) A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.(5) An employee of a person described in paragraphs (1) to (4), inclusive.(l) Mandatory income interest means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.(m) Net income means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section ____), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section ____. The term does not include an adjustment from income to principal under Section____.(n) Person means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.(o) Personal representative means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the persons status.(p) Principal means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.(q) Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.(r) Settlor means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that persons contribution, except to the extent another person has the power to revoke or withdraw that portion.(s) Special tax benefit means any of the following:(1) Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.(2) Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(a)(1), as amended).(3) An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlors spouse to receive the net income of the trust.(4) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:(A) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(B) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(C) An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:(i) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(ii) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(t) Successive interest means the interest of a successor beneficiary.(u) Successor beneficiary means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.(v) Terms of a trust means any of the following:(1) (A) For a trust, the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlors death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor.(B) Terms of a trust includes, but is not limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust.(C) Terms of a trust does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, terms of a trust does not include trust instruments or amendments that are superseded by the last restatement before the settlors death, but it does include amendments executed after the restatement. Terms of a trust also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.(2) For an estate, a will.(3) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.(w) (1) Trust includes both of the following:(A) An express trust, private or charitable, with additions to the trust, wherever and however created.(B) A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.(2) Trust does not include any of the following:(A) A constructive trust.(B) A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.(C) An arrangement under which a person is a nominee, escrowee, or agent for another.(x) Trustee means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.(y) Will means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individuals property, effective at the individuals death. Will includes a codicil or other amendment to a testamentary instrument.
Article 1. Short Title and Definitions
Article 1. Short Title and Definitions
16320. This section shall be known, and may be cited, as the Uniform Fiduciary Income and Principal Act.
16320. This section shall be known, and may be cited, as the Uniform Fiduciary Income and Principal Act.
16321. The following definitions apply for purposes of this chapter:(a) Accounting period means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.(b) Asset-backed security means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section ____, ____, or ____ applies.(c) Beneficiary includes the following:(1) For a trust:(A) A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.(B) A remainder beneficiary.(C) Any other successor beneficiary.(2) For an estate, an heir, legatee, and devisee.(3) For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other interest following a life estate or term interest.(d) Court means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in Section ____. (e) Current income beneficiary means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.(f) Distribution means a payment or transfer by a fiduciary to a beneficiary in the beneficiarys capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiarys right to receive the payment or transfer under the terms of the trust. Distribute, distributed, and distributee have corresponding meanings.(g) Estate means a decedents estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.(h) Fiduciary includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. Fiduciary includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.(i) Income means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 (commencing with Section ____).(j) Income interest means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciarys discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.(k) Independent person means a person that is not:(1) For a trust, any of the following:(A) A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees of trust income or principal were terminated, assuming no power of appointment is exercised.(B) A settlor of the trust.(C) An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.(2) For an estate, a beneficiary.(3) A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).(4) A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.(5) An employee of a person described in paragraphs (1) to (4), inclusive.(l) Mandatory income interest means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.(m) Net income means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section ____), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section ____. The term does not include an adjustment from income to principal under Section____.(n) Person means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.(o) Personal representative means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the persons status.(p) Principal means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.(q) Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.(r) Settlor means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that persons contribution, except to the extent another person has the power to revoke or withdraw that portion.(s) Special tax benefit means any of the following:(1) Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.(2) Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(a)(1), as amended).(3) An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlors spouse to receive the net income of the trust.(4) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:(A) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(B) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(C) An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:(i) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.(ii) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.(t) Successive interest means the interest of a successor beneficiary.(u) Successor beneficiary means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.(v) Terms of a trust means any of the following:(1) (A) For a trust, the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlors death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor.(B) Terms of a trust includes, but is not limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust.(C) Terms of a trust does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, terms of a trust does not include trust instruments or amendments that are superseded by the last restatement before the settlors death, but it does include amendments executed after the restatement. Terms of a trust also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.(2) For an estate, a will.(3) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.(w) (1) Trust includes both of the following:(A) An express trust, private or charitable, with additions to the trust, wherever and however created.(B) A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.(2) Trust does not include any of the following:(A) A constructive trust.(B) A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.(C) An arrangement under which a person is a nominee, escrowee, or agent for another.(x) Trustee means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.(y) Will means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individuals property, effective at the individuals death. Will includes a codicil or other amendment to a testamentary instrument.
16321. The following definitions apply for purposes of this chapter:
(a) Accounting period means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.
(b) Asset-backed security means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section ____, ____, or ____ applies.
(c) Beneficiary includes the following:
(1) For a trust:
(A) A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.
(B) A remainder beneficiary.
(C) Any other successor beneficiary.
(2) For an estate, an heir, legatee, and devisee.
(3) For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other interest following a life estate or term interest.
(d) Court means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in Section ____.
(e) Current income beneficiary means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.
(f) Distribution means a payment or transfer by a fiduciary to a beneficiary in the beneficiarys capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiarys right to receive the payment or transfer under the terms of the trust. Distribute, distributed, and distributee have corresponding meanings.
(g) Estate means a decedents estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.
(h) Fiduciary includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. Fiduciary includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.
(i) Income means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 (commencing with Section ____).
(j) Income interest means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciarys discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.
(k) Independent person means a person that is not:
(1) For a trust, any of the following:
(A) A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees of trust income or principal were terminated, assuming no power of appointment is exercised.
(B) A settlor of the trust.
(C) An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.
(2) For an estate, a beneficiary.
(3) A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).
(4) A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.
(5) An employee of a person described in paragraphs (1) to (4), inclusive.
(l) Mandatory income interest means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.
(m) Net income means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section ____), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section ____. The term does not include an adjustment from income to principal under Section____.
(n) Person means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.
(o) Personal representative means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the persons status.
(p) Principal means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.
(q) Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(r) Settlor means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that persons contribution, except to the extent another person has the power to revoke or withdraw that portion.
(s) Special tax benefit means any of the following:
(1) Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.
(2) Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 1361(a)(1), as amended).
(3) An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlors spouse to receive the net income of the trust.
(4) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:
(A) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.
(B) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.
(C) An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:
(i) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(b), as amended), could be made from the trust.
(ii) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Section 2612(a), as amended), could occur with respect to the trust.
(t) Successive interest means the interest of a successor beneficiary.
(u) Successor beneficiary means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.
(v) Terms of a trust means any of the following:
(1) (A) For a trust, the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlors death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor.
(B) Terms of a trust includes, but is not limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust.
(C) Terms of a trust does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, terms of a trust does not include trust instruments or amendments that are superseded by the last restatement before the settlors death, but it does include amendments executed after the restatement. Terms of a trust also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.
(2) For an estate, a will.
(3) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.
(w) (1) Trust includes both of the following:
(A) An express trust, private or charitable, with additions to the trust, wherever and however created.
(B) A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.
(2) Trust does not include any of the following:
(A) A constructive trust.
(B) A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.
(C) An arrangement under which a person is a nominee, escrowee, or agent for another.
(x) Trustee means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.
(y) Will means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individuals property, effective at the individuals death. Will includes a codicil or other amendment to a testamentary instrument.