EXPLANATION-Matter enclosed in bold-faced brackets [thus] in this bill is not enacted
and is intended to be omitted in the law.
FIRST REGULAR SESSION
SENATE BILL NO. 246
103RD GENERAL ASSEMBLY
INTRODUCED BY SENATOR CRAWFORD.
0457S.01I KRISTINA MARTIN, Secretary
AN ACT
To repeal sections 214.330, 469.401, 469.402, 469.403, 469.405, 469.409, 469.411, 469.413,
469.415, 469.417, 469.419, 469.421, 469.423, 469.425, 469.427, 469.429, 469.431,
469.432, 469.433, 469.435, 469.437, 469.439, 469.441, 469.443, 469.445, 469.447,
469.449, 469.451, 469.453, 469.455, 469.457, 469.459, 469.461, 469.463, 469.465,
and 469.467, RSMo, and to enact in lieu thereof forty-eight new sections relating to
trust and estate administration.
Be it enacted by the General Assembly of the State of Missouri, as follows:
Section A. Sections 214.330, 469.401, 469.402, 469.403, 1
469.405, 469.409, 469.411, 469.413, 469.4 15, 469.417, 469.419, 2
469.421, 469.423, 469.425, 469.427, 469.429, 469.431, 469.432, 3
469.433, 469.435, 469.437, 469.439, 469.441, 469.443, 469.445, 4
469.447, 469.449, 469.451, 469.453, 469.455, 469.457, 469.459, 5
469.461, 469.463, 469.465, and 469.467, RSMo, are repealed and 6
forty-eight new sections enacted in lieu thereof, to be known 7
as sections 214.330, 469.399, 469.401, 469.402, 469.403, 8
469.404, 469.405, 469.413, 469.415, 469.417, 469.419, 469.421, 9
469.423, 469.425, 469.427, 469.429, 469.431, 469.432, 46 9.433, 10
469.435, 469.437, 469.439, 469.441, 469.443, 469.445, 469.446, 11
469.447, 469.449, 469.451, 469.453, 469.455, 469.456, 469.457, 12
469.459, 469.462, 469.463, 469.464, 469.465, 469.467, 469.471, 13
469.473, 469.475, 469.477, 469.479, 469.481, 469.483, 469.48 5, 14
and 469.487, to read as follows:15
214.330. 1. (1) The endowed care trust fund required 1
by sections 214.270 to 214.410 shall be permanently set 2 SB 246 2
aside in trust or in accordance with the provisions of 3
subsection 2 of this section. The trustee of the endowed 4
care trust shall be a state or federally chartered financial 5
institution authorized to exercise trust powers in 6
Missouri. The contact information for a trust officer or 7
duly appointed representative of the trustee with knowledge 8
and access to the trust fund accounting and trust fund 9
records must be disclosed to the office or its duly 10
authorized representative upon request. 11
(2) The trust fund records, including all trust fund 12
accounting records, shall be maintained in the state o f 13
Missouri at all times or shall be electronically stored so 14
that the records may be made available in the state of 15
Missouri within fifteen business days of receipt of a 16
written request. The operator of an endowed care cemetery 17
shall maintain a curre nt name and address of the trustee and 18
the records custodian for the endowed care trust fund and 19
shall supply such information to the office, or its 20
representative, upon request. 21
(3) Missouri law shall control all endowed care trust 22
funds and the Missouri courts shall have jurisdiction over 23
endowed care trusts regardless of where records may be kept 24
or various administrative tasks may be performed. 25
2. An endowed care trust fund shall be administered in 26
accordance with Missouri law governi ng trusts, including but 27
not limited to the applicable provisions of chapters 456 and 28
469, except as specifically provided in this subsection or 29
where the provisions of sections 214.270 to 214.410 provide 30
differently, provided that a cemetery operator shall not in 31
any circumstances be authorized to restrict, enlarge, 32
change, or modify the requirements of this section or the 33
provisions of chapters 456 and 469 by agreement or otherwise. 34 SB 246 3
(1) Income and principal of an endowed care trust fund 35
shall be determined under the provisions of law applicable 36
to trusts, except that the provisions of section 469.405 37
shall not apply. 38
(2) No principal shall be distributed from an endowed 39
care trust fund except to the extent that a unitrust 40
election is in effect with respect to such trust under the 41
provisions of [section 469.411] sections 469.471 to 469.487 . 42
(3) No right to transfer jurisdiction from Missouri 43
under section 456.1-108 shall exist for endowed care trusts. 44
(4) All endowed care trusts shall be irrevocable. 45
(5) No trustee shall have the power to terminate an 46
endowed care trust fund under the provisions of section 47
456.4-414. 48
(6) A unitrust election made in accordance with the 49
provisions of chapter 469 shall be made by the cemetery 50
operator in the terms of the endowed care trust fund 51
agreement itself, not by the trustee. 52
(7) No contract of insurance shall be deemed a 53
suitable investment for an endowed care trust fund. 54
(8) The income from the endowed ca re fund may be 55
distributed to the cemetery operator at least annually on a 56
date designated by the cemetery operator, but no later than 57
sixty days following the end of the trust fund year. Any 58
income not distributed within sixty days following the end 59
of the trust's fiscal year shall be added to and held as 60
part of the principal of the trust fund. 61
3. The cemetery operator shall have the duty and 62
responsibility to apply the income distributed to provide 63
care and maintenance only for that part o f the cemetery 64
designated as an endowed care section and not for any other 65
purpose. 66 SB 246 4
4. In addition to any other duty, obligation, or 67
requirement imposed by sections 214.270 to 214.410 or the 68
endowed care trust agreement, the trustee's duties shal l be 69
the maintenance of records related to the trust and the 70
accounting for and investment of moneys deposited by the 71
operator to the endowed care trust fund. 72
(1) For the purposes of sections 214.270 to 214.410, 73
the trustee shall not be deemed re sponsible for the care, 74
the maintenance, or the operation of the cemetery, or for 75
any other matter relating to the cemetery, or the proper 76
expenditure of funds distributed by the trustee to the 77
cemetery operator, including, but not limited to, complian ce 78
with environmental laws and regulations. 79
(2) With respect to cemetery property maintained by 80
endowed care funds, the cemetery operator shall be 81
responsible for the performance of the care and maintenance 82
of the cemetery property. 83
5. If the endowed care cemetery fund is not 84
permanently set aside in a trust fund as required by 85
subsection 1 of this section, then the funds shall be 86
permanently set aside in an escrow account in the state of 87
Missouri. Funds in an escrow account shall be pl aced in an 88
endowed care trust fund under subsection 1 if the funds in 89
the escrow account exceed three hundred fifty thousand 90
dollars, unless otherwise approved by the division for good 91
cause. The account shall be insured by the Federal Deposit 92
Insurance Corporation or comparable deposit insurance and 93
held in a state or federally chartered financial institution 94
authorized to do business in Missouri and located in this 95
state. 96
(1) The interest from the escrow account may be 97
distributed to the c emetery operator at least in annual or 98 SB 246 5
semiannual installments, but not later than six months 99
following the calendar year. Any interest not distributed 100
within six months following the end of the calendar year 101
shall be added to and held as part of the principal of the 102
account. 103
(2) The cemetery operator shall have the duty and 104
responsibility to apply the interest to provide care and 105
maintenance only for that part of the cemetery in which 106
burial space shall have been sold and with respect to whi ch 107
sales the escrow account shall have been established and not 108
for any other purpose. The principal of such funds shall be 109
kept intact. The cemetery operator's duties shall be the 110
maintenance of records and the accounting for an investment 111
of moneys deposited by the operator to the escrow account. 112
For purposes of sections 214.270 to 214.410, the 113
administrator of the office of endowed care cemeteries shall 114
not be deemed to be responsible for the care, maintenance, 115
or operation of the cemetery. With respect to cemetery 116
property maintained by cemetery care funds, the cemetery 117
operator shall be responsible for the performance of the 118
care and maintenance of the cemetery property owned by the 119
cemetery operator. 120
(3) The division may approve an escrow agent if the 121
escrow agent demonstrates the knowledge, skill, and ability 122
to handle escrow funds and financial transactions and is of 123
good moral character. 124
6. The cemetery operator shall be accountable to the 125
owners of burial space in th e cemetery for compliance with 126
sections 214.270 to 214.410. 127
7. Excluding funds held in an escrow account, all 128
endowed care trust funds shall be administered in accordance 129
with an endowed care trust fund agreement, which shall be 130 SB 246 6
submitted to the office by the cemetery operator for review 131
and approval. The endowed care cemetery shall be notified 132
in writing by the office of endowed care cemeteries 133
regarding the approval or disapproval of the endowed care 134
trust fund agreement and regarding any c hanges required to 135
be made for compliance with sections 214.270 to 214.410 and 136
the rules and regulations promulgated thereunder. 137
8. All endowed care cemeteries shall be under a 138
continuing duty to file with the office of endowed care 139
cemeteries and to submit for prior approval any and all 140
changes, amendments, or revisions of the endowed care trust 141
fund agreement at least thirty days before the effective 142
date of such change, amendment, or revision. 143
9. If the endowed care trust fund agreemen t, or any 144
changes, amendments, or revisions filed with the office, are 145
not disapproved by the office within thirty days after 146
submission by the cemetery operator, the endowed care trust 147
fund agreement, or the related change, amendment, or 148
revision, shall be deemed approved and may be used by the 149
cemetery operator and the trustee. Notwithstanding any 150
other provision of this section, the office may review and 151
disapprove an endowed care trust fund agreement, or any 152
submitted change, amendment, or rev ision, after the thirty 153
days provided herein or at any other time if the agreement 154
is not in compliance with sections 214.270 to 214.410 or the 155
rules promulgated thereunder. Notice of disapproval by the 156
office shall be in writing and delivered to the cemetery 157
operator and the trustee within ten days of disapproval. 158
10. Funds in an endowed care trust fund or escrow 159
account may be commingled with endowed care funds for other 160
endowed care cemeteries, provided that the cemetery operator 161
and the trustee shall maintain adequate accounting records 162 SB 246 7
of the disbursements, contributions, and income allocated 163
for each cemetery. 164
11. By accepting the trusteeship of an endowed care 165
trust or accepting funds as an escrow agent pursuant to 166
sections 214.270 to 214.410, the trustee or escrow agent 167
submits personally to the jurisdiction of the courts of this 168
state and the office of endowed care cemeteries regarding 169
the administration of the trust or escrow account. A 170
trustee or escrow agent shall con sent in writing to the 171
jurisdiction of the state of Missouri and the office in 172
regards to the trusteeship or the operation of the escrow 173
account and to the appointment of the office of secretary of 174
state as its agent for service of process regarding an y 175
administrative or legal actions relating to the trust or the 176
escrow account, if it has no designated agent for service of 177
process located in this state. Such consent shall be filed 178
with the office prior to accepting funds pursuant to 179
sections 214.270 to 214.410 as trustee or as an escrow agent 180
on a form provided by the office by rule. 181
469.399. Sections 469.399 to 469.487 shall be known 1
and may be cited as the "Missouri Uniform Fiduciary Income 2
and Principal Act". 3
469.401. As used in sections [469.401] 469.399 to 1
[469.467] 469.487, the following terms mean: 2
(1) "Accounting period", a calendar year , unless 3
[another twelve-month period is selected by ] a fiduciary 4
selects another period of twelve calend ar months or 5
approximately twelve calendar months . The term "accounting 6
period" includes a [portion] part of a calendar year or 7
[other twelve-month] another period [that] of twelve 8
calendar months or approximately twelve calendar months that 9 SB 246 8
begins when an income interest begins or ends when an income 10
interest ends; 11
(2) "Asset-backed security", a security that is 12
serviced primarily by the cash flows of a discrete pool of 13
fixed or revolving receivables or other financial assets 14
that by their terms convert into cash within a finite time. 15
The term "asset-backed security" includes rights or other 16
assets that ensure the servicing or timely distribution of 17
proceeds to the holder of the asset -backed security. The 18
term "asset-backed security" does not include an asset to 19
which section 469.423, 469.437, or 469.447 applies; 20
(3) "Beneficiary", includes: 21
(a) For a trust: 22
a. A current beneficiary, including a current income 23
beneficiary and a beneficiary that may receive only 24
principal; 25
b. A remainder beneficiary; and 26
c. Any other successor beneficiary; 27
(b) For an estate, an heir, legatee, and devisee [of a 28
decedent's estate, and an income beneficiary and a remainder 29
beneficiary of a trust, including any type of entity that 30
has a beneficial interest in either an estate or a trust ]; 31
and 32
(c) For a life estate or term interest, a person that 33
holds a life estate, term interest, or remainder or other 34
interest following a life estate or term interest; 35
(4) "Court", any court in this state having 36
jurisdiction relating to a trust, estate, life estate, or 37
other term interest described in subdivision (2) of 38
subsection 1 of section 469.402; 39
(5) "Current income beneficiary", a beneficiary to 40
which a fiduciary may distribute net income, whether or not 41 SB 246 9
the fiduciary also may distribute principal to the 42
beneficiary; 43
(6) "Distribution", a payment or transfer by a 44
fiduciary to a beneficiary in the beneficiary's capacity as 45
a beneficiary, made unde r the terms of the trust, without 46
consideration other than the beneficiary's right to receive 47
the payment or transfer under the terms of the trust. The 48
terms "distribute", "distributed", and "distributee" have 49
corresponding meanings; 50
(7) "Estate", a decedent's estate. The term "estate" 51
includes the property of the decedent as the estate is 52
originally constituted and the property of the estate as it 53
exists at any time during administration; 54
[(3)] (8) "Fiduciary", includes a trustee, trust 55
protector determined under section 456.8 -808, personal 56
representative, [trustee, executor, administrator, successor 57
personal representative, special administrator and any other 58
person performing substantially the same function ] life 59
tenant, holder of a term "fiduciary" interest, and person 60
acting under a delegation from a fiduciary. The term 61
"fiduciary" includes a person that holds property for a 62
successor beneficiary whose interest may be affected by an 63
allocation of receipts and expenditures b etween income and 64
principal. If there are two or more cofiduciaries, the term 65
"fiduciary" includes all cofiduciaries acting under the 66
terms of the trust and applicable law ; 67
[(4)] (9) "Income", money or other property [that] a 68
fiduciary receives as current return from [a] principal 69
[asset, including a portion ]. The term "income" includes a 70
part of receipts from a sale, exchange , or liquidation of a 71
principal asset, [as] to the extent provided in sections 72
469.423 to 469.449; 73 SB 246 10
[(5) "Income beneficiary", a person to whom net income 74
of a trust is or may be payable; 75
(6)] (10) "Income interest", the right of [an] a 76
current income beneficiary to receive all or part of net 77
income, whether the terms of the trust require [it] the net 78
income to be distributed or authorize [it] the net income to 79
be distributed in the [trustee's] fiduciary's discretion. 80
The term "income interest" includes the right of a current 81
beneficiary to use property held by a fiduciary; 82
(11) "Independent person", a person that is not: 83
(a) For a trust: 84
a. A qualified beneficiary as defined in section 456.1 - 85
103; 86
b. A settlor of the trust; or 87
c. An individual whose legal obligation to support a 88
beneficiary may be satisfied by a distributi on from the 89
trust; 90
(b) For an estate, a beneficiary; 91
(c) A spouse, parent, brother, sister, or issue of an 92
individual described in paragraph (a) or (b) of this 93
subdivision; 94
(d) A corporation, partnership, limited liability 95
company, or other entity in which persons described in 96
paragraphs (a) to (c) of this subdivision, in the aggregate, 97
have voting control; or 98
(e) An employee of a person described in paragraph 99
(a), (b), (c), or (d) of this subdivision ; 100
[(7)] (12) "Mandatory income interest", the right of 101
[an] a current income beneficiary to receive net income that 102
the terms of the trust require the fiduciary to distribute; 103
[(8)] (13) "Net income", [if section 469.411 applies 104
to the trust, the unitrust amount, or if section 469.411 105 SB 246 11
does not apply to the trust, ] the total [receipts allocated 106
to income] allocations during an accounting period to income 107
under the terms of a trust and sections 469.399 to 469.487 108
minus the disbursements [made from income during the same 109
period, plus or minus transfers pursuant to sections 469.401 110
to 469.467 to or from income ] during the [same] accounting 111
period, other than distributions, allocated to income under 112
the terms of the trust and sections 469.399 to 469.487. To 113
the extent the trust is a unitrust under sections 469.471 to 114
469.487, the term "net income" means the unitrust amount 115
determined under sections 469.471 to 469.487. The term "net 116
income" includes an adjustment from principal to income 117
under section 469.405. The term "net income" does not 118
include an adjustment from income to principal under section 119
469.405; 120
[(9)] (14) "Person", an individual, [corporation, 121
business trust,] estate, trust, [partnership, limited 122
liability company, association, joint ve nture] business or 123
nonprofit entity, public corporation , government[,] or 124
governmental subdivision, agency, or instrumentality, 125
[public corporation] or [any] other legal [or commercial] 126
entity; 127
(15) "Personal representative", an executor, 128
administrator, successor personal representative, special 129
administrator, or person that performs substantially the 130
same function with respect to an estate under the law 131
governing the person's status; 132
[(10)] (16) "Principal", property held in trust for 133
distribution to [a remainder], production of income for, or 134
use by a current or successor beneficiary [when the trust 135
terminates]; 136 SB 246 12
[(11) "Qualified beneficiary", a beneficiary defined 137
in section 456.1-103; 138
(12) "Remainder beneficiary", a per son entitled to 139
receive principal when an income interest ends; 140
(13)] (17) "Record", information that is inscribed on 141
a tangible medium or that is stored in an electronic or 142
other medium and is retrievable in perceivable form; 143
(18) "Settlor", a person, including a testator, that 144
creates or contributes property to a trust. If more than 145
one person creates or contributes property to a trust, the 146
term "settlor" includes each person, to the extent of the 147
trust property attributable to that pe rson's contribution, 148
except to the extent another person has the power to revoke 149
or withdraw that portion; 150
(19) "Special tax benefit": 151
(a) Exclusion of a transfer to a trust from gifts 152
described in 26 U.S.C. Section 2503(b), as amended, beca use 153
of the qualification of an income interest in the trust as a 154
present interest in property; 155
(b) Status as a qualified subchapter S trust described 156
in 26 U.S.C. Section 1361(d)(3), as amended, at a time the 157
trust holds stock of an S corporation described in 26 U.S.C. 158
Section 1361(a)(1), as amended; 159
(c) An estate or gift tax marital deduction for a 160
transfer to a trust under 26 U.S.C. Section 2056 or 2523, as 161
amended, which depends or depended in whole or in part on 162
the right of the sett lor's spouse to receive the net income 163
of the trust; 164
(d) Exemption in whole or in part of a trust from the 165
federal generation-skipping transfer tax imposed by 26 166
U.S.C. Section 2601, as amended, because the trust was 167 SB 246 13
irrevocable on September 25, 1985, if there is any 168
possibility that: 169
a. A taxable distribution, as defined in 26 U.S.C. 170
Section 2612(b), as amended, could be made from the trust; or 171
b. A taxable termination, as defined in 26 U.S.C. 172
Section 2612(a), as amended, could occ ur with respect to the 173
trust; or 174
(e) An inclusion ratio, as defined in 26 U.S.C. 175
Section 2642(a), as amended, of the trust which is less than 176
one, if there is any possibility that: 177
a. A taxable distribution, as defined in 26 U.S.C. 178
Section 2612(b), as amended, could be made from the trust; or 179
b. A taxable termination, as defined in 26 U.S.C. 180
Section 2612(a), as amended, could occur with respect to the 181
trust; 182
(20) "Successive interest", the interest of a 183
successor beneficiary; 184
(21) "Successor beneficiary", a person entitled to 185
receive income or principal or to use property when an 186
income interest or other current interest ends; 187
(22) "Terms of a trust": 188
(a) Except as otherwise provided in paragraph (b) of 189
this subdivision, the manifestation of the settlor's [or 190
decedent's] intent regarding a trust's provisions as: 191
a. Expressed in [a manner which is] the trust 192
instrument; or 193
b. Established by other evidence that would be 194
admissible [as proof] in a judicial proceeding [, whether by 195
written or spoken words or by conduct ]; 196
(b) The trust's provisions as established, determined, 197
or amended by: 198 SB 246 14
a. A trustee or trust director in accordance with 199
applicable law; 200
b. Court order; or 201
c. A nonjudicial settlement agreement under section 202
456.1-111; 203
(c) For an estate, a will; or 204
(d) For a life estate or term interest, the 205
corresponding manifestation of the rights of the 206
beneficiaries; 207
(23) "Trust": 208
(a) Includes: 209
a. An express trust, private or charitable, with 210
additions to the trust, wherever and however created; and 211
b. A trust created or determined by judgment or decree 212
under which the trust is to be administered in the manner of 213
an express trust; and 214
(b) Does not include: 215
a. A constructive trust; 216
b. A resulting trust, conservatorship, guardianship, 217
multi-party account, custodial arrangement for a minor, 218
business trust, voting trust, security arrangement, 219
liquidation trust, or trust for the primary purpose of 220
paying debts, dividends, interest, salaries, wages, profits, 221
pensions, retirement benefits, or employee benefits of any 222
kind; or 223
c. An arrangement under which a person is a nominee, 224
escrowee, or agent for another ; 225
[(14)] (24) "Trustee", a person, other than a personal 226
representative, that owns or holds property for the benefit 227
of a beneficiary. The term "trustee" includes an original, 228
additional, or successor trustee, whether or not appointed 229
or confirmed by a court; 230 SB 246 15
[(15) "Unitrust amount", net income as defined by 231
section 469.411] 232
(25) "Will", any testamentary instrument recognized by 233
applicable law that makes a legally effective disposition of 234
an individual's property, effective at the individual's 235
death. The term "will" includes a codicil or other 236
amendment to a testamentary instrument . 237
469.402. 1. Except as otherwise provided in the terms 1
of a trust or sections 469.399 to 469.487, the provisions of 2
sections [456.3-301] 469.399 to [456.3-305 shall] 469.487 3
apply to [sections 469.401 to 469.467 for all purposes ]: 4
(1) A trust or estate; and 5
(2) A life estate or other term interest in which the 6
interest of one or more persons will be succeeded by the 7
interest of one or more other persons. 8
2. Except as otherwise provided in the terms of a 9
trust or sections 469.399 to 469.487, the provisions of 10
sections 469.399 to 469.487 apply when this state is the 11
principal place of administration of a trust or estate or 12
the situs of property that is not held in a trust or estate 13
and is subject to a life estate or other term interest 14
described in subdivision (2) of subsection 1 of this 15
section. By accepting the trusteeship of a trust having its 16
principal place of administration in this state or by moving 17
the principal place of administration of a trust to this 18
state, the trustee submits to the application of sections 19
469.399 to 469.487 to any matter within the scope of 20
sections 469.399 to 469.487 inv olving the trust. 21
469.403. 1. In [allocating receipts and disbursements 1
to or between principal and income, and with respect to any 2
matter within the scope of ] making an allocation or 3 SB 246 16
determination or exercising discretion under sections 4
469.413 to 469.421, a fiduciary shall: 5
(1) [Shall] Act in good faith, based on what is fair 6
and reasonable to all beneficiaries; 7
(2) Administer a trust or estate [under] impartially, 8
except to the extent the terms of the trust manifest an 9
intent that the fiduciary shall or [the will] may favor one 10
or more beneficiaries; 11
(3) Administer the trust or estate in accordance with 12
the terms of the trust , even if there is a different 13
provision in sections [469.401] 469.399 to [469.467] 14
469.487; and 15
[(2) May] (4) Administer [a] the trust or estate [by 16
exercising] in accordance with sections 469.399 to 469.487, 17
except to the extent the terms of the trust provide 18
otherwise or authorize the fiduciary to determine otherwise. 19
2. A fiduciary's allocation, determination, or 20
exercise of discretion pursuant to sections 469.399 to 21
469.487 is presumed to be fair and reasonable to all 22
beneficiaries. A fiduciary may exercise a discretionary 23
power of administration given to the f iduciary by the terms 24
of the trust [or the will, even if the ], and an exercise of 25
the power that produces a result different from a result 26
required or permitted by sections [469.401] 469.399 to 27
[469.467;] 469.487 does not create an inference that the 28
fiduciary abused the fiduciary's discretion. 29
[(3) Shall administer a trust or estate pursuant ] 30
3. A fiduciary shall: 31
(1) Add a receipt to [sections 469.401 to 469.467 if ] 32
principal, to the extent neither the terms of the trust [or 33
the will do not contain a different provision or do not 34
give] nor sections 469.399 to 469.487 allocate the 35 SB 246 17
[fiduciary a discretionary power of administration ] receipt 36
between income and principal ; and 37
[(4) Shall add a receipt or ] (2) Charge a 38
disbursement to principal, to the extent [that] neither the 39
terms of the trust [and] nor sections [469.401] 469.399 to 40
[469.467 do not provide a rule for allocating the receipt 41
or] 469.487 allocate the disbursement [to or] between 42
[principal and] income and principal. 43
[2. In exercising the power to adjust pursuant to 44
section 469.405 or a discretionary power of administration 45
regarding a matter within the scope of sections 469.401 to 46
469.467, whether granted by the terms of a trust, a will, or 47
sections 469.401 to 469.467, a fiduciary shall administer a 48
trust or estate impartially, based on what is fair and 49
reasonable to all of the beneficiaries, except to the extent 50
that the terms of the trust or the will clearly manifest an 51
intent that the fiduci ary shall or may favor one or more of 52
the beneficiaries. A determination in accordance with 53
sections 469.401 to 469.467 is presumed to be fair and 54
reasonable to all of the beneficiaries ] 55
4. A fiduciary may exercise the power to adjust under 56
section 469.405, convert an income trust to a unitrust under 57
subdivision (1) of subsection 1 of section 469.475, change 58
the percentage or method used to calculate a unitrust amount 59
under subdivision (2) of subsection 1 of section 469.475, or 60
convert a unitrust to an income trust under subdivision (3) 61
of subsection 1 of section 469.475, if the fiduciary 62
determines the exercise of the power will assist the 63
fiduciary to administer the trust or estate impartially. 64
5. Factors the fiduciary shall conside r in making the 65
determination under subsection 4 of this section include: 66
(1) The terms of the trust; 67 SB 246 18
(2) The nature, distribution standards, and expected 68
duration of the trust; 69
(3) The effect of the allocation rules, including 70
specific adjustments between income and principal, under 71
sections 407.413 to 407.461; 72
(4) The desirability of liquidity and regularity of 73
income; 74
(5) The desirability of the preservation and 75
appreciation of principal; 76
(6) The extent to which an asset is used or may be 77
used by a beneficiary; 78
(7) The increase or decrease in the value of principal 79
assets, reasonably determined by the fiduciary; 80
(8) Whether and to what extent the terms of the trust 81
give the fiduciary power to accumu late income or invade 82
principal or prohibit the fiduciary from accumulating income 83
or invading principal; 84
(9) The extent to which the fiduciary has accumulated 85
income or invaded principal in preceding accounting periods; 86
(10) The effect of current and reasonably expected 87
economic conditions; and 88
(11) The reasonably expected tax consequences of the 89
exercise of the power . 90
469.404. 1. As used in this section, the term 1
"fiduciary decision" means: 2
(1) A fiduciary's allocation between income and 3
principal or other determination regarding income and 4
principal required or authorized by the terms of the trust 5
or sections 469.399 to 469.487; 6
(2) The fiduciary's exercise or nonexercise of a 7
discretionary power regarding income and principal granted 8
by the terms of the trust or sections 469.399 to 469.487, 9 SB 246 19
including the power to adjust under section 469.405, convert 10
an income trust to a unitrust under subdivision (1) of 11
subsection 1 of section 469.475, chan ge the percentage or 12
method used to calculate a unitrust amount under subdivision 13
(2) of subsection 1 of section 469.475, or convert a 14
unitrust to an income trust under subdivision (3) of 15
subsection 1 of section 469.475; or 16
(3) The fiduciary's implementation of a decision 17
described in subdivision (1) or (2) of this subsection. 18
2. The court shall not order a fiduciary to change a 19
fiduciary decision unless the court determines that the 20
fiduciary decision was an abuse of the fiduciary's 21
discretion. 22
3. If the court determines that a fiduciary decision 23
was an abuse of the fiduciary's discretion, the court may 24
order a remedy authorized by law, including under section 25
456.10-1001. To place the beneficiaries in the positions 26
the beneficiaries would have occupied if there had not been 27
an abuse of the fiduciary's discretion, the court may order: 28
(1) The fiduciary to exercise or refrain from 29
exercising the power to adjust under section 469.405; 30
(2) The fiduciary to exercise o r refrain from 31
exercising the power to convert an income trust to a 32
unitrust under subdivision (1) of subsection 1 of section 33
469.475, change the percentage or method used to calculate a 34
unitrust amount under subdivision (2) of subsection 1 of 35
section 469.475, or convert a unitrust to an income trust 36
under subdivision (3) of subsection 1 of section 469.475; 37
(3) The fiduciary to distribute an amount to a 38
beneficiary; 39
(4) A beneficiary to return some or all of a 40
distribution; or 41 SB 246 20
(5) The fiduciary to withhold an amount from one or 42
more future distributions to a beneficiary. 43
4. On petition by a fiduciary for instruction, the 44
court may determine whether a proposed fiduciary decision 45
will result in an abuse of the fiduciary's dis cretion. If 46
the petition describes the proposed decision, contains 47
sufficient information to inform the beneficiary of the 48
reasons for making the proposed decision and the facts on 49
which the fiduciary relies, and explains how the beneficiary 50
will be affected by the proposed decision, a beneficiary 51
that opposes the proposed decision has the burden to 52
establish that it will result in an abuse of the fiduciary's 53
discretion. 54
469.405. 1. [A trustee may adjust between principal 1
and income to the extent the trustee considers necessary if 2
the trustee invests and manages trust assets as a prudent 3
investor, the terms of the trust describe the amount that 4
may or shall be distributed to a beneficiary by referring to 5
the trust's income, and the trustee determines, after 6
applying subsection 1 of section 469.403, that the trustee 7
is unable to comply with subsection 2 of section 469.403 ] 8
Except as otherwise provided in the terms of a trust or this 9
section, a fiduciary, in a record, with out court approval, 10
may adjust between income and principal if the fiduciary 11
determines the exercise of the power to adjust will assist 12
the fiduciary to administer the trust or estate impartially. 13
2. This section does not create a duty to exercise or 14
consider the power to adjust under subsection 1 of this 15
section or to inform a beneficiary about the applicability 16
of this section. 17
3. A fiduciary that in good faith exercises or fails 18
to exercise the power to adjust under subsection 1 of thi s 19 SB 246 21
section is not liable to a person affected by the exercise 20
or failure to exercise . 21
[2.] 4. In deciding whether and to what extent to 22
exercise the power [conferred by] to adjust under subsection 23
1 of this section, a [trustee] fiduciary shall consider all 24
factors the fiduciary considers relevant [to the trust and 25
its beneficiaries], including [the following] relevant 26
factors [to the extent relevant: ] in subsection 5 of section 27
469.403 and the application of sections 469.423, 469.435, 28
and 469.445. 29
[(1) The nature, purpose and expected duration of the 30
trust; 31
(2) The intent of the settlor; 32
(3) The identity and circumstances of the 33
beneficiaries; 34
(4) The needs for liquidity, regularity of income, and 35
preservation and app reciation of capital; 36
(5) The assets held in the trust, including the extent 37
to which such assets consist of financial assets, interests 38
in closely held enterprises, tangible and intangible 39
personal property, or real property, and the extent to wh ich 40
such assets are used by a beneficiary, and whether such 41
assets were purchased by the trustee or received from the 42
settlor; 43
(6) The net amount allocated to income pursuant to 44
sections 469.401 to 469.467, other than this section, and 45
the increase or decrease in the value of the principal 46
assets, which the trustee may estimate as to assets for 47
which market values are not readily available; 48
(7) Whether and to what extent the terms of the trust 49
give the trustee the power to invade princip al or accumulate 50
income, or prohibit the trustee from invading principal or 51 SB 246 22
accumulating income, and the extent to which the trustee has 52
exercised a power from time to time to invade principal or 53
accumulate income; 54
(8) The actual and anticipated effect of economic 55
conditions on principal and income and effects of inflation 56
and deflation; and 57
(9) The anticipated tax consequences of an adjustment. 58
3.] 5. A [trustee may] fiduciary shall not exercise 59
the power under subsection 1 of this section to make an 60
adjustment or under section 469.435 to make a determination 61
that an allocation is insubstantial if : 62
(1) [That diminishes the income interest in a trust 63
which requires all of the income to be paid at least 64
annually to a spouse and for which an estate tax or gift tax 65
marital deduction would be allowed, in whole or in part, if 66
the trustee did not have the power to make the adjustment; 67
(2) That reduces the actuarial value of the income 68
interest in a trust to which a person transfers property 69
with the intent to qualify for a gift tax exclusion; 70
(3) That changes] The adjustment or determination 71
would reduce the amount payable to a current income 72
beneficiary from a trust that qualifies for a special tax 73
benefit, except to the extent the adjustment is made to 74
provide for a reasonable apportionment of the total return 75
of the trust between the current income beneficiary and 76
successor beneficiaries; 77
(2) The adjustment or determination would change the 78
amount payable to a beneficiary, as a fixed annuity or a 79
fixed fraction of the value of the trust assets , under the 80
terms of the trust; 81
[(4) From any] (3) The adjustment or determination 82
would reduce an amount that is permanently set aside for a 83 SB 246 23
charitable [purposes] purpose under [a will or] the terms of 84
[a] the trust [to the extent that the existence of the power 85
to adjust would change the character of the amount ], unless 86
both income and principal are set aside for [federal income, 87
gift or estate tax purposes] the charitable purpose ; 88
[(5) If ] (4) Possessing or exercising the power [to 89
make an adjustment causes an individual ] would cause a 90
person to be treated as the owner of all or part of the 91
trust for federal income tax purposes[, and the individual 92
would not be treated as the owner if the trustee did not 93
possess the power to make an adjustment ]; 94
[(6) If ] (5) Possessing or exercising the power [to 95
make an adjustment causes ] would cause all or part of the 96
value of the trust assets to be included [for estate tax 97
purposes] in the gross estate of an individual [who has] for 98
federal estate tax purposes; 99
(6) Possessing or exercising the power [to remove or 100
appoint a trustee, or both, ] would cause an individual to be 101
treated as making a gift for federal gift tax purposes; 102
(7) The fiduciary is not an independent person; 103
(8) The trust is irrevocable and [the assets would not 104
be included in the estate of the individual if the trustee 105
did not possess] provides for income to be paid to the 106
settlor and possessing or exercising the power [to make an 107
adjustment] would cause the adjusted principal or income to 108
be considered an available resource or available income 109
under a public-benefit program; or 110
[(7) If the trustee is a beneficiary of the trust; or 111
(8) If the trustee is not a beneficiary, but the 112
adjustment would benefit the trustee directly or indirectly ] 113
(9) The trust is a unitrust under sections 469.471 to 114
469.487. 115 SB 246 24
[4.] 6. If [subdivision (5), (6), (7) or (8) of ] 116
subsection [3] 5 of this section applies to a [trustee and 117
there is more than one trustee, a cotrustee to whom the 118
provision does] fiduciary: 119
(1) A cofiduciary to which subdivisions (4) to (7) of 120
subsection 5 of this s ection do not apply may [make] 121
exercise the [adjustment] power to adjust unless the 122
exercise of the power by the remaining [trustee or trustees] 123
cofiduciary or cofiduciaries is not permitted by the terms 124
of the trust or law other than sections 469.399 to 469.487; 125
and 126
(2) If there is no cofiduciary to which subdivisions 127
(4) to (7) of subsection 5 of this section do not apply, the 128
fiduciary may appoint a cofiduciary to which subdivisions 129
(4) to (7) of subsection 5 of this section do not apply, 130
which may be a special fiduciary with limited powers, and 131
the appointed cofiduciary may exercise the power to adjust 132
under subsection 1 of this section, unless the appointment 133
of a cofiduciary or the exercise of the power by a 134
cofiduciary is not permit ted by the terms of the trust or 135
law other than under sections 469.399 to 469.487 . 136
[5.] 7. A [trustee] fiduciary may release [the entire 137
power conferred by subsection 1 of this section, or may 138
release only] or delegate to a cofiduciary the power to 139
adjust [from income to principal or the power to adjust from 140
principal to income if the trustee is uncertain about 141
whether possessing or exercising ] under subsection 1 of this 142
section if the fiduciary determines that the fiduciary's 143
possession or exercise of the power will or may: 144
(1) Cause a result described in subdivisions (1) to 145
(6) or subdivision (8) of subsection [3] 5 of this section 146 SB 246 25
[,]; or [if the trustee determines that possessing or 147
exercising the power will or may ] 148
(2) Deprive the trust of a tax benefit or impose a tax 149
burden not described in subdivisions (1) to (6) of 150
subsection [3] 5 of this section. 151
8. A fiduciary's release or delegation to a 152
cofiduciary under subsection 7 of this section of the power 153
to adjust under subsection 1 of this section: 154
(1) Shall be in a record; 155
(2) Applies to the entire power, unless the release or 156
delegation provides a limitation, which may be a limitation 157
to the power to adjust: 158
(a) From income to principal; 159
(b) From principal to income; 160
(c) For specified property; or 161
(d) In specified circumstances; 162
(3) For a delegation, may be modified by a 163
redelegation under this subsection by the cofiduciary to 164
which the delegation is made; and 165
(4) Subject to subdivision (3) of this subsection, is 166
permanent [or for] unless the release or delegation provides 167
a specified period, including a period measured by the life 168
of an individual or the lives of more than one individual . 169
[6.] 9. Terms of a trust that deny or limit the power 170
[of a trustee] to [make an adjustment] adjust between income 171
and principal [and income] do not affect the application of 172
this section unless [it is clear from] the terms of the 173
trust [that the terms are intended t o] expressly deny [the 174
trustee] or limit the power [of adjustment conferred by ] to 175
adjust under subsection 1 of this section. 176
10. The exercise of the power to adjust under 177
subsection 1 of this section in any accounting period may 178 SB 246 26
apply to the current period, the immediately preceding 179
period, and one or more subsequent periods. 180
11. A description of the exercise of the power to 181
adjust under subsection 1 of this section shall be: 182
(1) Included in a report, if any, sent to 183
beneficiaries under subsection 3 of section 456.8 -813; or 184
(2) Communicated at least annually to the qualified 185
beneficiaries defined in section 456.1 -103 other than all 186
beneficiaries that receive or are entitled to receive income 187
from the trust or would be entit led to receive a 188
distribution of principal if the trust were terminated at 189
the time the notice is sent, assuming no power of 190
appointment is exercised. 191
469.413. [After a decedent dies, in the case ] 1. This 1
section applies when: 2
(1) The death of an individual results in the creation 3
of an estate[, or after] or trust; or 4
(2) An income interest in a trust [ends, the following 5
rules apply:] terminates, whether the trust continues or is 6
distributed. 7
[(1)] 2. A fiduciary of an estate or [of a 8
terminating] trust with an income interest that terminates 9
shall determine, under subsection 7 of this section and 10
sections 469.417 to 469.462, the amount of net income and 11
net principal receipts received from property specific ally 12
given to a beneficiary [pursuant to the rules in sections 13
469.417 to 469.461 which apply to trustees and the rules in 14
subdivision (5) of this section ]. The fiduciary shall 15
distribute the net income and net principal receipts to the 16
beneficiary [who] that is to receive the specific 17
property[;]. 18 SB 246 27
[(2)] 3. A fiduciary shall determine the [remaining] 19
income and net income of [a decedent's] an estate or [a 20
terminating] income interest [pursuant to the rules in ] in a 21
trust that terminates, oth er than the amount of net income 22
determined under subsection 2 of this section, under 23
sections 469.417 to [469.461 which apply to trustees ] 24
469.462 and by: 25
[(a)] (1) Including in net income all income from 26
property used or sold to discharge liabilities; 27
[(b)] (2) Paying from income or principal, in the 28
fiduciary's discretion, fees of attorneys, accountants , and 29
fiduciaries[;], court costs and other expenses of 30
administration[;], and interest on [death] estate and 31
inheritance taxes and other taxes imposed because of the 32
decedent's death, but the fiduciary may pay [those] the 33
expenses from income of property passing to a trust for 34
which the fiduciary claims [an] a federal estate tax marital 35
or charitable deduction only to the extent [that]: 36
(a) The payment of [those] the expenses from income 37
will not cause the reduction or loss of the deduction; [and] 38
or 39
(b) The fiduciary makes an adjustment under subsection 40
2 of section 469.462; and 41
[(c)] (3) Paying from principal [all] other 42
disbursements made or incurred in connection with the 43
settlement of [a decedent's] the estate or the winding up of 44
[a terminating] an income interest that terminates, 45
including: 46
(a) To the extent authorized by the decedent's will, 47
the terms of the trust, or applicable law, debts, funeral 48
expenses, disposition of remains, family allowances, estate 49 SB 246 28
and [death] inheritance taxes, and other taxes imposed 50
because of the decedent's death; and 51
(b) Related penalties that are apportion ed, by the 52
decedent's will, the terms of the trust, or applicable law, 53
to the estate or [terminating] income interest [by the will, 54
the terms of the trust, or applicable law; 55
(3) A fiduciary shall distribute to a beneficiary who 56
receives a pecuniary amount outright the interest or any 57
other amount provided by the will, the terms of the trust, 58
or in the absence of any such provisions, the provisions of 59
section 473.633, from net income determined pursuant to 60
subdivision (2) of this section or fr om principal to the 61
extent that net income is insufficient ] that terminates. 62
4. If a decedent's will, the terms of a trust, or 63
applicable law provides for the payment of interest or the 64
equivalent of interest to a beneficiary that receives a 65
pecuniary amount outright, the fiduciary shall make the 66
payment from net income determined under subsection 3 of 67
this section or from principal to the extent net income is 68
insufficient. 69
5. If a beneficiary is to receive a pecuniary amount 70
outright from a trust after an income interest ends because 71
of an income beneficiary's death, and no payment of interest 72
or [other amount] the equivalent of interest is provided for 73
by the terms of the trust or applicable law, the fiduciary 74
shall [distribute] pay the interest or [other amount] the 75
equivalent of interest to which the beneficiary would be 76
entitled under applicable law if the pecuniary amount were 77
required to be paid under a will [;]. 78
[(4)] 6. A fiduciary shall distribute [the] net income 79
remaining after [distributions] payments required by 80
[subdivision (3)] subsections 4 and 5 of this section in the 81 SB 246 29
manner described in section 469.415 to all other 82
beneficiaries, including a beneficiary [who] that receives a 83
pecuniary amount in trust, ev en if the beneficiary holds an 84
unqualified power to withdraw assets from the trust or other 85
presently exercisable general power of appointment over the 86
trust[;]. 87
[(5)] 7. A fiduciary [may] shall not reduce principal 88
or income receipts from proper ty described in [subdivision 89
(1)] subsection 2 of this section because of a payment 90
described in sections 469.451 and 469.453 to the extent 91
[that] the decedent's will, the terms of the trust, or 92
applicable law requires the fiduciary to make the payment 93
from assets other than the property or to the extent [that] 94
the fiduciary recovers or expects to recover the payment 95
from a third party. The net income and principal receipts 96
from the property [are] shall be determined by including 97
[all of] the amounts the fiduciary receives or pays [with 98
respect to] regarding the property, whether [those amounts] 99
the amount accrued or became due before, on , or after the 100
date of [a] the decedent's death or an income interest's 101
terminating event, and [by] making a reasonable provision 102
for [amounts that the fiduciary believes ] an amount the 103
estate or [terminating] income interest may become obligated 104
to pay after the property is distributed. 105
469.415. 1. [Each] Except to the extent sections 1
469.471 to 469.487 apply for a beneficiary that is a trust, 2
each beneficiary described in subdivision [(4)] (6) of 3
section 469.413 is entitled to receive a [portion] share of 4
the net income equal to the beneficiary's fractional 5
interest in undistributed principal assets, using values as 6
of the distribution date. If a fiduciary makes more than 7
one distribution of assets to beneficiaries to [whom] which 8 SB 246 30
this section applies, each beneficiary, including [one who] 9
a beneficiary that does not receive par t of the 10
distribution, is entitled, as of each distribution date, to 11
a share of the net income the fiduciary [has] received after 12
the [date of] decedent's death [or], an income interest's 13
other terminating event, or [earlier] the preceding 14
distribution [date but has not distributed as of the current 15
distribution date] by the fiduciary. 16
2. In determining a beneficiary's share of net income 17
under subsection 1 of this section , the following rules 18
apply: 19
(1) The beneficiary is entitled to re ceive a [portion] 20
share of the net income equal to the beneficiary's 21
fractional interest in the undistributed principal assets 22
immediately before the distribution date [, including assets 23
that later may be sold to meet principal obligations ]; 24
(2) The beneficiary's fractional interest [in the 25
undistributed principal assets ] under subdivision (1) of 26
this subsection shall be calculated [without regard to 27
property specifically given to a beneficiary and property 28
required to pay pecuniary amounts no t in trust; 29
(3) The beneficiary's fractional interest in the 30
undistributed principal assets shall be calculated ]: 31
(a) On the [basis of the] aggregate value of [those] 32
the assets as of the distribution date without reducing the 33
value by any unpaid principal obligation; and 34
(b) Without regard to: 35
a. Property specifically given to a beneficiary under 36
the decedent's will or the terms of the trust; and 37
b. Property required to pay pecuniary amounts not in 38
trust; and 39 SB 246 31
[(4)] (3) The distribution date [for purposes of this 40
section] under subdivision (1) of this subsection may be the 41
date as of which the fiduciary calculates the value of the 42
assets if that date is reasonably near the date on which the 43
assets are [actually] distributed. 44
3. [If] To the extent a fiduciary does not distribute 45
under this section all [of] the collected but undistributed 46
net income to each [person] beneficiary as of a distribution 47
date, the fiduciary shall maintain [appropriate] records 48
showing the interest of each beneficiary in [that] the net 49
income. 50
4. If this section applies to income from an asset, a 51
fiduciary may apply the rules in this section [, to the 52
extent that the fiduciary considers it appropriate, ] to net 53
gain or loss realized from the disposition of the asset 54
after the [date of] decedent's death [or], an income 55
interest's terminating event, or [earlier] the preceding 56
distribution [date from the disposition of a principal asset 57
if this section applies to the income from the asset] by the 58
fiduciary. 59
469.417. 1. An income beneficiary is entitled to net 1
income in accordance with the terms of the trust from the 2
date [on which the] an income interest begins. [An] The 3
income interest begins on th e date specified in the terms of 4
the trust or, if no date is specified, on the date an asset 5
becomes subject to [a trust or successive income interest ]: 6
(1) The trust for the current income beneficiary; or 7
(2) A successive interest for a succ essor beneficiary. 8
2. An asset becomes subject to a trust under 9
subdivision (1) of subsection 1 of this section : 10
(1) [On the date it is transferred to the trust in the 11
case of] For an asset that is transferred to [a] the trust 12 SB 246 32
during the [transferor's] settlor's life, on the date the 13
asset is transferred ; 14
(2) [On the date of a testator's death in the case of ] 15
For an asset that becomes subject to [a] the trust [by 16
reason] because of a [will] decedent's death, on the date of 17
the decedent's death, even if there is an intervening period 18
of administration of the [testator's] decedent's estate; or 19
(3) [On the date of an individual's death in the case 20
of] For an asset that is transferred to a fiduciary by a 21
third party because of [the individual's] a decedent's 22
death, on the date of the decedent's death . 23
3. An asset becomes subject to a successive [income] 24
interest under subdivision (2) of subsection 1 of this 25
section on the day after the preceding income interest ends, 26
as determined [pursuant to] under subsection 4 of this 27
section, even if there is an intervening period of 28
administration to wind up the preceding income interest. 29
4. An income interest ends on the day before an income 30
beneficiary dies or another ter minating event occurs [,] or 31
on the last day of a period during which there is no 32
beneficiary to [whom] which a [trustee] fiduciary may or 33
shall distribute income. 34
469.419. 1. A [trustee] fiduciary shall allocate an 1
income receipt or disbursement, other than [one] a receipt 2
to which [subdivision (1)] subsection 2 of section 469.413 3
applies, to principal if its due date occurs before [a 4
decedent dies in the case of ] the date on which: 5
(1) For an estate, the decedent died; or [before] 6
(2) For a trust or successive interest, an income 7
interest begins [in the case of a trust or successive income 8
interest]. 9 SB 246 33
2. [A trustee shall allocate an income receipt or 10
disbursement to income if its ] If the due date of a periodic 11
income receipt or disbursement occurs on or after the date 12
on which a decedent [dies] died or an income interest 13
[begins and it is a periodic due date. An income] began, a 14
fiduciary shall allocate the receipt or disbursement to 15
income. 16
3. If an income receipt or disbursement is not 17
periodic or has no due date, a fiduciary shall [be treated] 18
treat the receipt or disbursement under this section as 19
accruing from day to day [if its due date is not periodic or 20
it has no due date]. The fiduciary shall allocate to 21
principal the portion of the receipt or disbursement 22
accruing before the date on which a decedent [dies] died or 23
an income interest [begins shall be allocated to principal ] 24
began, and to income the balance [shall be allocated to 25
income]. 26
[3.] 4. A receipt or disbursement is periodic under 27
subsections 2 and 3 of this section if: 28
(1) The receipt or disbursement shall be paid at 29
regular intervals under an obligation to make payments; or 30
(2) The payer customarily ma kes payments at regular 31
intervals. 32
5. An item of income or [an] obligation is due under 33
this section on the date [a payment] the payer is required 34
to make a payment. If a payment date is not stated, there 35
is no due date [for the purposes of sect ions 469.401 to 36
469.467]. 37
6. Distributions to shareholders or other owners from 38
an entity to which section 469.423 applies are [deemed to 39
be] due: 40 SB 246 34
(1) On the date fixed by or on behalf of the entity 41
for determining [who is] the persons entitled to receive the 42
distribution [or,]; 43
(2) If no date is fixed, on the [declaration] date 44
[for] of the decision by or on behalf of the entity to make 45
the distribution[. A due date is periodic for receipts or 46
disbursements that shall be paid at regular intervals under 47
a lease or an obligation to pay interest or if an entity 48
customarily makes distributions at regular intervals ]; or 49
(3) If no date is fixed and the fiduciary does not 50
know the date of the decision by or on behalf of the entity 51
to make the distribution, on the date the fiduciary learns 52
of the decision. 53
469.421. 1. [For purposes of] As used in this 1
section, the [phrase] term "undistributed income" means net 2
income received on or before the date on w hich an income 3
interest ends. The [phrase] term "undistributed income" 4
does not include an item of income or expense that is due or 5
accrued[,] or net income that has been added or is required 6
to be added to principal under the terms of the trust. 7
2. Except as otherwise provided in subsection 3 of 8
this section, when a mandatory income interest of a 9
beneficiary ends, the [trustee] fiduciary shall pay [to a 10
mandatory income beneficiary who survives that date, or the 11
estate of a deceased mandator y income beneficiary whose 12
death causes the interest to end, ] the beneficiary's share 13
of the undistributed income that is not disposed of under 14
the terms of the trust [unless] to the beneficiary or, if 15
the beneficiary does not survive the date the inte rest ends, 16
to the beneficiary's estate. 17
3. If a beneficiary has an unqualified power to 18
[revoke] withdraw more than five percent of the value of a 19 SB 246 35
trust immediately before [the] an income interest ends [. In 20
the latter case,]: 21
(1) The fiduciary shall allocate to principal the 22
undistributed income from the portion of the trust that may 23
be [revoked shall be added to principal ] withdrawn; and 24
(2) Subsection 2 of this section applies only to the 25
balance of the undistributed income . 26
[3.] 4. When a [trustee's] fiduciary's obligation to 27
pay a fixed annuity or a fixed fraction of the value of [the 28
trust's] assets ends, the [trustee] fiduciary shall prorate 29
the final payment [if and to the extent ] as required [by 30
applicable law to accomplish a purpose of the trust or its 31
settlor relating] to preserve an income tax, gift tax, 32
estate tax, or other tax [requirements] benefit. 33
469.423. 1. [For purposes of] As used in this 1
section, the [term] following terms mean: 2
(1) "Capital distribution", an entity distribution of 3
money that is a: 4
(a) Return of capital; or 5
(b) Distribution in total or partial liquidation of 6
the entity; 7
(2) "Entity" [means]: 8
(a) A corporation, partnership, limited liability 9
company, regulated investment company, real estate 10
investment trust, common trust fund, or any other 11
organization [in which a trustee has an interest, other than 12
a trust or estate to which section 469.425 applies, a 13
business or activity to which section 469.427 applies, or an 14
asset-backed security to which section 469.449 applies ] or 15
arrangement in which a fiduciary owns or holds an interest, 16
whether or not the entity is a taxpayer for federal income 17
tax purposes; and 18 SB 246 36
(b) The term "entity" does not include: 19
a. A trust or estate to which section 469.425 applies; 20
b. A business or other activity to which section 21
469.427 applies that is not conducted by an entity described 22
in paragraph (a) of this subdivision; 23
c. An asset-backed security; or 24
d. An instrument or arrangement to which section 25
469.446 applies; 26
(3) "Entity distribution", a payment or transfer by an 27
entity made to a person in the person's capacity as an owner 28
or holder of an interest in the e ntity. 29
2. In this section, an attribute or action of an 30
entity includes an attribute or action of any other entity 31
in which the entity owns or holds an interest, including an 32
interest owned or held indirectly through another entity . 33
[2.] 3. Except as otherwise provided in subdivisions 34
(2) to (4) of subsection 4 of this section, a [trustee] 35
fiduciary shall allocate to income : 36
(1) Money received [from] in an entity[. 37
3. A trustee shall allocate the following receipts 38
from an entity to principal: 39
(1) Property other than money; 40
(2) Money received in one distribution or a series of 41
related distributions in exchange for part or all of a 42
trust's interest in the entity; 43
(3) Money received in total or partial liquida tion of 44
the entity; and 45
(4) Money received from an entity that is ] 46
distribution; and 47
(2) Tangible personal property of nominal value 48
received from the entity. 49
4. A fiduciary shall allocate to principal: 50 SB 246 37
(1) Property received in a n entity distribution that 51
is not: 52
(a) Money; or 53
(b) Tangible personal property of nominal value; 54
(2) Money received in an entity distribution in an 55
exchange for part or all of the fiduciary's interest in the 56
entity, to the extent the entity distribution reduces the 57
fiduciary's interest in the entity relative to the interests 58
of other persons that own or hold interests in the entity; 59
(3) Money received in an entity distribution that the 60
fiduciary determines or estimates is a ca pital distribution; 61
and 62
(4) Money received in an entity distribution from an 63
entity that is: 64
(a) A regulated investment company or [a] real estate 65
investment trust if the money [distributed] received is a 66
capital gain dividend for federal income tax purposes[. 67
4. Money is received in partial liquidation: 68
(1) To the extent that the entity, at or near the time 69
of a distribution, indicates that such money is a 70
distribution in partial liquidation; or 71
(2) If]; or 72
(b) Treated for federal income tax purposes comparably 73
to the treatment described in paragraph (a) of this 74
subdivision. 75
5. A fiduciary may determine or estimate that money 76
received in an entity distribution is a capital distribution: 77
(1) By relying, without inquiry or investigation, on a 78
characterization of the entity distribution provided by or 79
on behalf of the entity, unless the fiduciary: 80 SB 246 38
(a) Determines, on the basis of information known to 81
the fiduciary, that the characterization is or may be 82
incorrect; or 83
(b) Owns or holds more than fifty percent of the 84
voting interest in the entity; 85
(2) By determining or estimating, on the basis of 86
information known to the fiduciary or provided to the 87
fiduciary by or on behalf of the e ntity, that the total 88
amount of money and property received by the fiduciary in 89
[a] the entity distribution or a series of related entity 90
distributions is or will be greater than twenty percent of 91
the [entity's gross assets, as shown by the entity's ye ar- 92
end financial statements immediately preceding the initial 93
receipt. 94
5. Money is not received in partial liquidation, nor 95
may it be taken into account pursuant to subdivision (2) of 96
subsection 4 of this section, to the extent that such money 97
does not exceed the amount of income tax that a trustee or 98
beneficiary shall pay on taxable income of the entity that 99
distributes the money. 100
6. A trustee may rely upon a statement made by an 101
entity about the source or character of a distribution if 102
the statement is made at or near the time of distribution by 103
the entity's board of directors or other person or group of 104
persons authorized to exercise powers to pay money or 105
transfer property comparable to those of a corporation's 106
board of directors] fair market value of the fiduciary's 107
interest in the entity; or 108
(3) If neither subdivision (1) nor (2) of this 109
subsection applies, by considering the factors in subsection 110
6 of this section and the information known to the fiduciary 111
or provided to the fiduciary by or on behalf of the entity. 112 SB 246 39
6. In making a determination or estimate under 113
subdivision (3) of subsection 5 of this section, a fiduciary 114
may consider: 115
(1) A characterization of an entity distribution 116
provided by or on beh alf of the entity; 117
(2) The amount of money or property received in: 118
(a) The entity distribution; or 119
(b) What the fiduciary determines is or will be a 120
series of related entity distributions; 121
(3) The amount described in subdivision ( 2) of this 122
subsection compared to the amount the fiduciary determines 123
or estimates is, during the current or preceding accounting 124
periods: 125
(a) The entity's operating income; 126
(b) The proceeds of the entity's sale or other 127
disposition of: 128
a. All or part of the business or other activity 129
conducted by the entity; 130
b. One or more business assets that are not sold to 131
customers in the ordinary course of the business or other 132
activity conducted by the entity; or 133
c. One or more assets other than business assets, 134
unless the entity's primary activity is to invest in assets 135
to realize gain on the disposition of all or some of the 136
assets; 137
(c) If the entity's primary activity is to invest in 138
assets to realize gain on the dispo sition of all or some of 139
the assets, the gain realized on the disposition; 140
(d) The entity's regular, periodic entity 141
distributions; 142
(e) The amount of money the entity has accumulated; 143
(f) The amount of money the entity has borrowed; 144 SB 246 40
(g) The amount of money the entity has received from 145
the sources described in sections 469.433, 469.439, 469.441, 146
and 469.443; and 147
(h) The amount of money the entity has received from a 148
source not otherwise described in this subdivision; and 149
(4) Any other factor the fiduciary determines is 150
relevant. 151
7. If, after applying subsections 3 to 6 of this 152
section, a fiduciary determines that a part of an entity 153
distribution is a capital distribution but is in doubt about 154
the amount of the entity distribution that is a capital 155
distribution, the fiduciary shall allocate to principal the 156
amount of the entity distribution that is in doubt. 157
8. If a fiduciary receives additional information 158
about the application of this section to an e ntity 159
distribution before the fiduciary has paid part of the 160
entity distribution to a beneficiary, the fiduciary may 161
consider the additional information before making the 162
payment to the beneficiary and may change a decision to make 163
the payment to the beneficiary. 164
9. If a fiduciary receives additional information 165
about the application of this section to an entity 166
distribution after the fiduciary has paid part of the entity 167
distribution to a beneficiary, the fiduciary is not required 168
to change or recover the payment to the beneficiary but may 169
consider that information in determining whether to exercise 170
the power to adjust under section 469.405 . 171
469.425. A [trustee] fiduciary shall allocate to 1
income an amount received as a distribution of income , 2
including a unitrust distribution under sections 469.471 to 3
469.487, from a trust or [an] estate in which the [trust] 4
fiduciary has an interest, other than [a] an interest the 5 SB 246 41
fiduciary purchased [interest] in a trust that is a n 6
investment entity, and shall allocate to principal an amount 7
received as a distribution of principal from [such a] the 8
trust or estate. If a [trustee] fiduciary purchases, or 9
receives from a settlor, an interest in a trust that is an 10
investment entity, [or a decedent or donor transfers an 11
interest in such a trust to a trustee, ] section 469.423, 12
469.446, or 469.449 [shall apply] applies to a receipt from 13
the trust. 14
469.427. 1. [If a trustee who conducts ] This section 1
applies to a business or other activity conducted by a 2
fiduciary if the fiduciary determines that it is in the 3
[best interest] interests of [all] the beneficiaries to 4
account separately for the business or other activity 5
instead of: 6
(1) Accounting for [it] the business or other activity 7
as part of the [trust's] fiduciary's general accounting 8
records[,]; or 9
(2) Conducting the [trustee] business or other 10
activity through an entity described in paragraph (a) of 11
subdivision (2) of subsection 1 of s ection 469.423. 12
2. A fiduciary may [maintain separate accounting 13
records] account separately under this section for [its] the 14
transactions of a business or other activity , whether or not 15
[its] assets of the business or other activity are 16
segregated from other [trust] assets held by the fiduciary . 17
[2.] 3. A [trustee who] fiduciary that accounts 18
separately under this section for a business or other 19
activity: 20
(1) May determine: 21
(a) The extent to which the net cash receipts of the 22
business or other activity shall be retained for : 23 SB 246 42
a. Working capital[,]; 24
b. The acquisition or replacement of fixed assets [,]; 25
and 26
c. Other reasonably foreseeable needs of the business 27
or other activity[,]; and 28
(b) The extent to which the remaining net cash 29
receipts are accounted for as principal or income in the 30
[trust's] fiduciary's general accounting records [. If a 31
trustee sells assets of the business or other activity, 32
other than in the ordinary course of the busine ss or 33
activity, the trustee ] for the trust; 34
(2) May make a determination under subdivision (1) of 35
this subsection separately and differently from the 36
fiduciary's decisions concerning distributions of income or 37
principal; and 38
(3) Shall account for the net amount received from the 39
sale of an asset of the business or other activity, other 40
than a sale in the ordinary course of the business or other 41
activity, as principal in the [trust's] fiduciary's general 42
accounting records for the trust, to the extent the 43
[trustee] fiduciary determines that the net amount received 44
is no longer required in the conduct of the business or 45
other activity. 46
[3.] 4. Activities for which a [trustee may maintain 47
separate accounting records ] fiduciary may account 48
separately under this section include: 49
(1) Retail, manufacturing, service , and other 50
traditional business activities; 51
(2) Farming; 52
(3) Raising and selling livestock and other animals; 53
(4) [Management of] Managing rental properties; 54 SB 246 43
(5) [Extraction of] Extracting minerals, water, and 55
other natural resources; 56
(6) Growing and cutting timber [operations]; [and] 57
(7) [Activities] An activity to which section 469.446, 58
469.447, or 469.449 applies; and 59
(8) Any other business conducted by the fiduciary . 60
469.429. A [trustee] fiduciary shall allocate to 1
principal: 2
(1) To the extent not allocated to income [pursuant 3
to] under sections [469.401] 469.399 to [469.467] 469.487, 4
[assets] an asset received from [a transferor]: 5
(a) An individual during the [transferor's] 6
individual's lifetime[, a decedent's]; 7
(b) An estate[,]; 8
(c) A trust [with a terminating] on termination of an 9
income interest[,]; or 10
(d) A payer under a contract naming the [trust or its 11
trustee] fiduciary as beneficiary; 12
(2) Except as otherwise provided in sections 469.423 13
to 469.449, money or other property received from the sale, 14
exchange, liquidation , or change in form of a principal 15
asset[, including realized profit, subject to sections 16
469.423 to 469.467]; 17
(3) [Amounts] An amount recovered from a third 18
[parties] party to reimburse the [trust] fiduciary because 19
of [disbursements] a disbursement described in [subdivision 20
(7) of] subsection 1 of section 469.453 or for [other 21
reasons] another reason to the extent not based on [the] 22
loss of income; 23
(4) Proceeds of property taken by eminent domain, [but 24
a separate award made ] except that proceeds awarded for 25
[the] loss of income [with respect to] in an accounting 26 SB 246 44
period [during which] are income if a current income 27
beneficiary had a mandatory income interest [is income] 28
during the period; 29
(5) Net income received in an accounting period during 30
which there is no beneficiary to [whom] which a [trustee] 31
fiduciary may or shall distribute income; and 32
(6) Other receipts as provided in sections 469.435 to 33
469.449. 34
469.431. To the extent [that a trustee accounts ] a 1
fiduciary does not account for [receipts from] the 2
management of rental property [pursuant to this section ] as 3
a business under section 469.427 , the [trustee] fiduciary 4
shall allocate to income an amount received as rent of real 5
or personal property, including an amount receive d for 6
cancellation or renewal of a lease. An amount received as a 7
refundable deposit, including a security deposit or a 8
deposit that is to be applied as rent for future periods [,]: 9
(1) Shall be added to principal and held subject to 10
the terms of the lease [and is not], except as otherwise 11
provided by law other than sections 469.399 to 469.487; and 12
(2) Is not allocated to income or available for 13
distribution to a beneficiary until the [trustee's] 14
fiduciary's contractual obligations have b een satisfied with 15
respect to that amount. 16
469.432. 1. This section does not apply to an 1
obligation to which section 469.437, 469.439, 469.441, 2
469.443, 469.446, 469.447, or 469.449 applies. 3
2. A fiduciary shall allocate to in come, without 4
provision for amortization of premium, an amount received as 5
interest[, whether determined at a fixed, variable or 6
floating rate,] on an obligation to pay money to the 7
[trustee] fiduciary, including an amount received as 8 SB 246 45
consideration for prepaying principal [, shall be allocated 9
to income without any provision for amortization of premium ]. 10
[2.] 3. A [trustee] fiduciary shall allocate to 11
principal an amount received from the sale, redemption , or 12
other disposition of an obligation to pay money to the 13
[trustee more than one year after it is purchased or 14
acquired by the trustee, including an obligation whose 15
purchase price or value when it is acquired is less than its 16
value at maturity. If the obligation matures within one 17
year after it is purchased or acquired by the trustee, an 18
amount received in excess of its purchase price or its value 19
when acquired by the trust shall be allocated to income. 20
3. This section does not apply to an obligation to 21
which section 469.437, 46 9.439, 469.441, 469.443, 469.447 or 22
469.449 applies] fiduciary. A fiduciary shall allocate to 23
income the increment in value of a bond or other obligation 24
for the payment of money bearing no stated interest but 25
payable or redeemable, at maturity or ano ther future time, 26
in an amount that exceeds the amount in consideration of 27
which it was issued. 28
469.433. 1. This section does not apply to a contract 1
to which section 469.437 applies. 2
2. Except as otherwise provided in subsect ion [2] 3 of 3
this section, a [trustee] fiduciary shall allocate to 4
principal the proceeds of a life insurance policy or other 5
contract [in which the trust or its trustee is named ] 6
received by the fiduciary as beneficiary, including a 7
contract that insures [the trust or its trustee ] against 8
[loss for] damage to, destruction of, or loss of title to [a 9
trust] an asset. The [trustee] fiduciary shall allocate 10
dividends on an insurance policy to income [if] to the 11
extent premiums on the policy are paid from income[,] and to 12 SB 246 46
principal [if] to the extent premiums on the policy are paid 13
from principal. 14
[2.] 3. A [trustee] fiduciary shall allocate to income 15
proceeds of a contract that insures the [trustee] fiduciary 16
against loss of: 17
(1) Occupancy or other use by [an] a current income 18
beneficiary[, loss of]; 19
(2) Income[,]; or[,] 20
(3) Subject to section 469.427, [loss of] profits from 21
a business. 22
[3. This section does not apply to a contract to which 23
section 469.437 applies .] 24
469.435. 1. If a [trustee] fiduciary determines that 1
an allocation between income and principal [and income] 2
required by section 469.437, 469.439, 469.441, 469.443 or 3
469.449 is insubstantial, the [trustee] fiduciary may 4
allocate the entire amount to principal , unless [one of the 5
circumstances described in ] subsection [3] 5 of section 6
469.405 applies to the allocation. [This power] 7
2. A fiduciary may [be exercised by a cotrustee in the 8
circumstances described in subsect ion 4 of section 469.405 9
and may be released for the reasons and in the manner 10
described in subsection 5 of section 469.405. ] presume an 11
allocation is [presumed to be] insubstantial under 12
subsection 1 of this section if: 13
(1) The amount of the all ocation would increase or 14
decrease net income in an accounting period, as determined 15
before the allocation, by less than ten percent; [or] and 16
(2) [The value of] The asset producing the receipt 17
[for which the allocation would ] to be [made is] allocated 18
has a fair market value less than ten percent of the total 19 SB 246 47
fair market value of the [trust's] assets owned or held by 20
the fiduciary at the beginning of the accounting period. 21
3. The power to make a determination under subsection 22
1 of this section may be: 23
(1) Exercised by a cofiduciary in the manner described 24
in subsection 6 of section 469.405; or 25
(2) Released or delegated for a reason described in 26
subsection 7 of section 469.405 and in the manner described 27
in subsection 8 of s ection 469.405. 28
469.437. 1. As used in this section, the following 1
terms mean: 2
(1) "Internal income of a separate fund", the amount 3
determined under subsection 2 of this section; 4
(2) "Marital trust", a trust: 5
(a) Of which the settlor's surviving spouse is the 6
only current income beneficiary and is entitled to a 7
distribution of all the current net income of the trust; and 8
(b) That qualifies for a marital deduction with 9
respect to the settlor's estate under 26 U.S.C. Section 10
2056, as amended, because: 11
a. An election to qualify for a marital deduction 12
under 26 U.S.C. Section 2056(b)(7), as amended, has been 13
made; or 14
b. The trust qualifies for a marital deduction under 15
26 U.S.C. Section 2056(b)(5) , as amended; 16
(3) "Payment", an amount [that is: 17
(a) Received or withdrawn from a plan; or 18
(b) One of a series of distributions that have been or 19
will be received] a fiduciary may receive over a fixed 20
number of years or during the life of one or more 21
individuals [under any contractual or other arrangement, or 22
is a single payment from a plan that the trustee could have 23 SB 246 48
received over a fixed number of years or during the life of 24
one or more individuals ] because of services rendered or 25
property transferred to the payer in exchange for future 26
amounts the fiduciary may receive. The term "payment" 27
includes an amount received in money or property from the 28
payer's general assets or from a separate fund created by 29
the payer; 30
[(2) "Plan", a contractual, custodial, trust or other 31
arrangement that provides for distributions to the trust, 32
including, but not limited to, qualified retirement plans, 33
Individual Retirement Accounts, Roth Individual Retirement 34
Accounts, public and private annuities, and deferred 35
compensation, including payments received directly from an 36
entity as defined in section 469.423 regardless of whether 37
or not such distributions are made from a specific fund or 38
account. 39
2. If any portion of a payment is c haracterized as a 40
distribution to the trustee of interest, dividends or a 41
dividend equivalent, the trustee shall allocate the portion 42
so characterized to income. The trustee shall allocate the 43
balance of that payment to principal. 44
3. If no part of a payment is allocated to income 45
pursuant to subsection 2 of this section, then for each 46
accounting period of the trust that any payment is received 47
by the trust with respect to the trust's interest in a plan, 48
the trustee shall allocate to income th at portion of the 49
aggregate value of all payments received by the trustee in 50
that accounting period equal to the amount of plan income 51
attributable to the trust's interest in the plan for that 52
calendar year. The trustee shall allocate the balance of 53
that payment to principal. 54 SB 246 49
4. For purposes of this section, if a payment is 55
received from a plan that maintains a separate account or 56
fund for its participants or account holders, including, but 57
not limited to, defined contribution retirement plan s, 58
Individual Retirement Accounts, Roth Individual Retirement 59
Accounts, and some types of deferred compensation plans, the 60
phrase "plan income" shall mean either the amount of the 61
plan account or fund held for the benefit of the trust that, 62
if the plan account or fund were a trust, would be allocated 63
to income pursuant to sections 469.401 to 469.467 for that 64
accounting period, or four percent of the value of the plan 65
account or fund on the first day of that accounting period. 66
The method of determi ning plan income pursuant to this 67
subsection shall be chosen by the trustee in the trustee's 68
discretion. The trustees may change the method of 69
determining plan income pursuant to this subsection for any 70
future accounting period. 71
5. For purposes of this section if the payment is 72
received from a plan that does not maintain a separate 73
account or fund for its participants or account holders, 74
including by way of example and not limitation defined 75
benefit retirement plans and some types of deferred 76
compensation plans, the term "plan income" shall mean four 77
percent of the total present value of the trust's interest 78
in the plan as of the first day of the accounting period, 79
based on reasonable actuarial assumptions as determined by 80
the trustee. 81
6. Notwithstanding subsections 1 to 5 of this section, 82
with respect to a trust where an election to qualify for a 83
marital deduction under Section 2056(b)(7) or Section 84
2523(f) of the Internal Revenue Code of 1986, as amended, 85
has been made, or a tr ust that qualified for the marital 86 SB 246 50
deduction under either Section 2056(b)(5) or Section 2523(e) 87
of the Internal Revenue Code of 1986, as amended, a trustee 88
shall determine the plan income for the accounting period as 89
if the plan were a trust subject to sections 469.401 to 90
469.467. Upon request of the surviving spouse, the trustee 91
shall demand that the person administering the plan 92
distribute the plan income to the trust. The trustee shall 93
allocate a payment from the plan to income to the extent of 94
the plan income and distribute that amount to the surviving 95
spouse. The trustee shall allocate the balance of the 96
payment to principal. Upon request of the surviving spouse, 97
the trustee shall allocate principal to income to the extent 98
the plan income exceeds payments made from the plan to the 99
trust during the accounting period. 100
7. If, to obtain an estate or gift tax marital 101
deduction for a trust, a trustee shall allocate more of a 102
payment to income than provided for by this section, the 103
trustee shall allocate to income the additional amount 104
necessary to obtain the marital deduction. ] 105
(4) "Separate fund", includes a private or commercial 106
annuity, an individual retirement account, and a pension, 107
profit-sharing, stock bonus, or stock ownership plan. 108
2. For each accounting period, the following rules 109
apply to a separate fund: 110
(1) The fiduciary shall determine the internal income 111
of the separate fund as if the separate fund was a trust 112
subject to sections 469.399 to 469.4 87; 113
(2) If the fiduciary cannot determine the internal 114
income of the separate fund under subdivision (1) of this 115
subsection, the internal income of the separate fund is 116
deemed to equal three percent of the value of the separate 117 SB 246 51
fund, according to the most recent statement of value 118
preceding the beginning of the accounting period; and 119
(3) If the fiduciary cannot determine the value of the 120
separate fund under subdivision (2) of this subsection, the 121
value of the separate fund is deemed to eq ual the present 122
value of the expected future payments, as determined under 123
26 U.S.C. Section 7520, as amended, for the month preceding 124
the beginning of the accounting period for which the 125
computation is made. 126
3. A fiduciary shall allocate a payme nt received from 127
a separate fund during an accounting period to income, to 128
the extent of the internal income of the separate fund 129
during the accounting period, and the balance to principal. 130
4. The fiduciary of a marital trust shall: 131
(1) Withdraw from a separate fund the amount the 132
current income beneficiary of the trust requests the 133
fiduciary to withdraw, not greater than the amount by which 134
the internal income of the separate fund during the 135
accounting period exceeds the amount the fiduc iary otherwise 136
receives from the separate fund during the accounting period; 137
(2) Transfer from principal to income the amount the 138
current income beneficiary requests the fiduciary to 139
transfer, not greater than the amount by which the internal 140
income of the separate fund during the accounting period 141
exceeds the amount the fiduciary receives from the separate 142
fund during the accounting period after the application of 143
subdivision (1) of this subsection; and 144
(3) Distribute to the current inco me beneficiary as 145
income: 146
(a) The amount of the internal income of the separate 147
fund received or withdrawn during the accounting period; and 148 SB 246 52
(b) The amount transferred from principal to income 149
under subdivision (2) of this subsection. 150
5. For a trust, other than a marital trust, of which 151
one or more current income beneficiaries are entitled to a 152
distribution of all the current net income, the fiduciary 153
shall transfer from principal to income the amount by which 154
the internal income of a separate fund during the accounting 155
period exceeds the amount the fiduciary receives from the 156
separate fund during the accounting period. 157
469.439. 1. As used in this section, the [phrase] 1
term "liquidating asset" means an asset w hose value will 2
diminish or terminate because the asset is expected to 3
produce receipts for a [period of] limited [duration] time. 4
The [phrase] term "liquidating asset" includes a leasehold, 5
patent, copyright, royalty right, and right to receive 6
payments during a period of more than one year under an 7
arrangement that does not provide for the payment of 8
interest on the unpaid balance. [The phrase] 9
2. This section does not [include a payment] apply to 10
a receipt subject to section 469.423, 469.437, [resources 11
subject to section] 469.441, [timber subject to section ] 12
469.443, [an activity subject to section ] 469.446, 469.447, 13
[an asset subject to section ] 469.449, or [any asset for 14
which the trustee establishes a reserve for depreciation 15
pursuant to section] 469.455. 16
[2.] 3. A [trustee] fiduciary shall allocate: 17
(1) To income [ten percent of the receipts from ]: 18
(a) A receipt produced by a liquidating asset [and the 19
balance], to the extent the receipt does not exceed three 20
percent of the value of the asset; or 21
(b) If the fiduciary cannot determine the value of the 22
asset, ten percent of the receipt; and 23 SB 246 53
(2) To principal, the balance of the receipt . 24
469.441. 1. To the extent [that a trustee accounts 1
for receipts] a fiduciary does not account for a receipt 2
from an interest in minerals , water, or other natural 3
resources [pursuant to this section ] as a business under 4
section 469.427, the [trustee] fiduciary shall allocate 5
[them as follows] the receipt: 6
(1) [If] To income, to the extent received: 7
(a) As [nominal] delay rental or [nominal] annual rent 8
on a lease[, a receipt shall be allocated to income ]; 9
(b) As a factor for interest or the equivalent of 10
interest under an agreement creating a production payment; or 11
(c) On account of an interest in renewable water; 12
(2) To principal, if received from a production 13
payment, [a receipt shall be allocated to income if and to 14
the extent that the agreement creating the production 15
payment provides a factor for interest or its equivalent. 16
The balance shall be allocated to principal; ] to the extent 17
paragraph (b) of subdivision (1) of this subsection does not 18
apply; or 19
(3) [If an amount received ] Between income and 20
principal equitably, to the extent received: 21
(a) On account of an interest in nonrenewable water; 22
(b) As a royalty, shut-in-well payment, take-or-pay 23
payment, or bonus [or delay rental is more than nominal, 24
ninety percent shall be allocat ed to principal and the 25
balance to income]; or 26
[(4) If an amount is received ] (c) From a working 27
interest or any other interest not provided for in 28
subdivision (1)[,] or (2) [or (3)] of this subsection[, 29
ninety percent of the net amount received shall be allocated 30 SB 246 54
to principal and the balance to income ] or paragraph (a) or 31
(b) of this subdivision . 32
2. [An amount received on account of ] This section 33
applies to an interest [in water that is renewable shall be 34
allocated to income. If the water is not renewable, ninety 35
percent of the amount shall be allocated to principal and 36
the balance to income. 37
3. Sections 469.401 to 469.467 apply ] owned or held by 38
a fiduciary whether or not a [decedent or donor] settlor was 39
extracting minerals, water, or other natural resources 40
before the fiduciary owned or held the interest [became 41
subject to the trust ]. 42
3. An allocation of a receipt under subdivision (3) of 43
subsection 1 of this section is presumed to be equitable if 44
the amount allocated to principal is equal to the amount 45
allowed by Title 26 of the United States Code, as amended, 46
as a deduction for depletion of the interest. 47
4. If a [trust] fiduciary owns or holds an interest in 48
minerals, water, or other natural resources [on] before 49
August 28, [2001] 2025, the [trustee] fiduciary may allocate 50
receipts from the interest as provided in [sections 469.401 51
to 469.467] this section or in the manner used by the 52
[trustee] fiduciary before August 28, [2001] 2025. If the 53
[trust] fiduciary acquires an interest in minerals, water , 54
or other natural resources on or after August 28, [2001] 55
2025, the [trustee] fiduciary shall allocate receipts from 56
the interest as provided in [sections 469.401 to 469.467 ] 57
this section. 58
469.443. 1. To the extent [that a trustee accounts ] a 1
fiduciary does not account for receipts from the sale of 2
timber and related products [pursuant to this] as a business 3 SB 246 55
under section 469.427, the [trustee] fiduciary shall 4
allocate the net receipts: 5
(1) To income, to the extent [that] the amount of 6
timber [removed] cut from the land does not exceed the rate 7
of growth of the timber [during the accounting periods in 8
which a beneficiary has a mandatory income interest ]; 9
(2) To principal, to the extent [that] the amount of 10
timber [removed] cut from the land exceeds the rate of 11
growth of the timber or the net receipts are from the sale 12
of standing timber; 13
(3) [To or] Between income and principal if the net 14
receipts are from the lease of [timberland] land used for 15
growing and cutting timber or from a contract to cut timber 16
from land [owned by a trust], by determining the amount of 17
timber [removed] cut from the land under the lease or 18
contract and applying the rules in sub divisions (1) and (2) 19
of this subsection; or 20
(4) To principal, to the extent [that] advance 21
payments, bonuses, and other payments are not allocated 22
[pursuant to either] under subdivision (1), (2) , or (3) of 23
this subsection. 24
2. In determining net receipts to be allocated 25
[pursuant to] under subsection 1 of this section, a 26
[trustee] fiduciary shall deduct and transfer to principal a 27
reasonable amount for depletion. 28
3. [Sections 469.401 to 469.467 apply ] This section 29
applies to land owned or held by a fiduciary whether or not 30
a [decedent or transferor ] settlor was [harvesting] cutting 31
timber from the land before the fiduciary owned or held the 32
property [before it became subject to the trust ]. 33
4. If a [trust] fiduciary owns or holds an interest in 34
[timberland on] land used for growing and cutting timber 35 SB 246 56
before August 28, [2001] 2025, the [trustee] fiduciary may 36
allocate net receipts from the sale of timber and related 37
products as provided in [sections 469.401 to 469.467 ] this 38
section or in the manner used by the [trustee] fiduciary 39
before August 28, [2001] 2025. If the [trust] fiduciary 40
acquires an interest in [timberland] land used for growing 41
and cutting timber on or after August 28, [2001] 2025, the 42
[trustee] fiduciary shall allocate net receipts from the 43
sale of timber and related products as provided in [sections 44
469.401 to 469.467] this section. 45
469.445. 1. If a trust received property for which a 1
gift or estate tax marital deduction [is] was allowed [for 2
all or part of a trust whose ] and the settlor's spouse holds 3
a mandatory income interest in the trust, the spouse may 4
require the trustee, to the extent the trust assets [consist 5
substantially of property that does ] otherwise do not 6
provide the spouse with sufficient income from or use of the 7
trust assets[, and if the amounts that the trustee transfers 8
from principal to income pursuant to section 469.405 and 9
distributes to the spouse from principal pursuant to the 10
terms of the trust are insufficient to provide the spouse 11
with the beneficial enjoyment required to obtain the 12
marital] to qualify for the deduction, [the spouse may 13
require the trustee] to: 14
(1) Make property productive of income [,]; 15
(2) Convert property to property productive of income 16
within a reasonable time [,]; or 17
(3) Exercise the power [conferred by subsection 1 of ] 18
to adjust under section 469.405. 19
2. The trustee may decide which action or combination 20
of actions in subsection 1 of this section to take. 21 SB 246 57
[2. In cases not governed by subsection 1 of this 22
section, proceeds from the sale or other disposition of an 23
asset are principal without regard to the amount of income 24
the asset produces during any accounting period. ] 25
469.446. A fiduciary shall allocate receipts from or 1
related to a financial instrument or arrangement not 2
otherwise addressed by sections 469.399 to 469.487. The 3
allocation shall be consistent with sections 469.447 and 4
469.449. 5
469.447. 1. As used in this section, the term 1
"derivative" means a contract [or financial], instrument, 2
other arrangement, or [a] combination of contracts [and 3
financial], instruments, or other arrangements, the value, 4
rights, and obligations of which [gives a trust the right or 5
obligation to participate in some or all changes in the 6
price of a] are, in whole or in part, dependent on or 7
derived from an underlying tangible or intangible asset [or] 8
group of tangible or intangible assets, [or changes in a 9
rate, an] index [of prices], or occurrence of an event. The 10
term "derivative" includes stocks, fixed income securities, 11
and financial instruments and arrangements based on indices, 12
commodities, interest rates, [or other market indicator for 13
an asset or a group of assets ] weather-related events, and 14
credit default events . 15
2. To the extent [that a trustee] a fiduciary does not 16
account [pursuant to section 469.427 for transactions ] for a 17
transaction in derivatives[, the trustee] as a business 18
under section 469.427, the fiduciary shall allocate [to 19
principal] ten percent of receipts from the transaction and 20
ten percent of disbursements made in connection with [those 21
transactions] the transaction to income and the balance to 22
principal. 23 SB 246 58
3. The provisions of subsection 4 of this section 24
apply if: 25
(1) A [trustee] fiduciary: 26
(a) Grants an option to buy property from [the] a 27
trust, whether or not the trust owns the property when the 28
option is granted[,]; 29
(b) Grants an option that permits another person to 30
sell property to the trust [,]; or 31
(c) Acquires an option to buy property for the trust 32
or an option to sell an asset owned by the trust [,]; and 33
(2) The [trustee] fiduciary or other owner of the 34
asset is required to deliver the asset if the option is 35
exercised[,]. 36
4. If this subsection applies, the fiduciary shall 37
allocate ten percent to income and the balance to principal 38
of the following amounts: 39
(1) An amount received for gran ting the option [shall 40
be allocated to principal. ]; 41
(2) An amount paid to acquire the option [shall be 42
paid from principal. A]; and 43
(3) Gain or loss realized [upon] on the exercise [of 44
an option, including an option granted to a settlor ], 45
exchange, settlement, offset, closing, or expiration of the 46
[trust for services rendered, shall be allocated to 47
principal] option. 48
469.449. 1. [As used in this section, the phrase 1
"asset-backed security" means an asset whose value is based 2
upon the right it gives the owner to receive distributions 3
from the proceeds of financial assets that provide 4
collateral for the security. The phrase includes an asset 5
that gives the owner the right to receive from the 6
collateral financial a ssets only the interest or other 7 SB 246 59
current return or only the proceeds other than interest or 8
current return. The phrase does not include an asset to 9
which section 469.423 or 469.437 applies. 10
2. If a trust receives a payment from interest or 11
other current return and from other proceeds of the 12
collateral financial assets, the trustee ] Except as 13
otherwise provided in subsection 2 of this section, a 14
fiduciary shall allocate to income [the portion of the 15
payment which] a receipt from or related to an asset-backed 16
security, to the extent the payer identifies the payment as 17
being from interest or other current return , and [shall 18
allocate] to principal the balance of the [payment to 19
principal] receipt. 20
[3.] 2. If a [trust] fiduciary receives one or more 21
payments in exchange for part or all of the [trust's entire] 22
fiduciary's interest in an asset -backed security [in one 23
accounting period, the trustee shall allocate the payments 24
to principal. If a payment is one of a series of payments 25
that will result in the ], including a liquidation or 26
redemption of the [trust's] fiduciary's interest in the 27
security [over more than one accounting period, ] the 28
[trustee] fiduciary shall allocate to income ten percent of 29
receipts from the [payment to income] transaction and [the 30
balance] ten percent of disbursements made in connection 31
with the transaction, and to principal the balance of the 32
receipts and disbursements . 33
469.451. [A trustee shall make the following 1
disbursements from income to the extent that they are not 2
disbursements to which paragraph (b) or (c) of ] Subject to 3
section 469.456, and except as otherwise provided in 4
subdivision (2) or (3) of subsection 3 of section 469.413 5
[applies], a fiduciary shall disburse from income: 6 SB 246 60
(1) One-half of: 7
(a) The regular compensation of the [trustee] 8
fiduciary and [of] any person providing investment advisory 9
[or], custodial, or other services to the [trustee] 10
fiduciary, to the extent income is sufficient ; and 11
[(2) One-half of all expenses ] (b) An expense for 12
[accountings] an accounting, judicial [proceedings] or 13
nonjudicial proceeding , or other [matters] matter that 14
[involve] involves both [the] income and [remainder] 15
successive interests, to the extent income is sufficient; 16
[(3) All of the other] (2) The balance of the 17
disbursements described in subdivision (1) of this section, 18
to the extent a fiduciary that is an independent person 19
determines that making those disbursements from income would 20
be in the interests of the beneficiaries; 21
(3) Another ordinary [expenses] expense incurred in 22
connection with [the] administration, management , or 23
preservation of [trust] property and [the] distribution of 24
income, including interest, an ordinary [repairs] repair, 25
regularly recurring [taxes] tax assessed against principal, 26
and [expenses] an expense of [a] an accounting, judicial or 27
nonjudicial proceeding, or other matter that [concerns] 28
involves primarily [the] an income interest, to the extent 29
income is sufficient ; and 30
(4) [Recurring premiums] A premium on insurance 31
covering [the] loss of a principal asset or [the loss of] 32
income from or use of the asset. 33
469.453. 1. [A trustee shall make the following 1
disbursements] Subject to section 469.457, and except as 2
otherwise provided in subdivision (2) of subsection 3 of 3
section 469.413, a fiduciary shall disburse from principal: 4 SB 246 61
(1) The [remaining one-half] balance of the 5
disbursements described in [subdivisions (1) and (2)] 6
subsections 1 and 3 of section 469.451, after application of 7
subsection 2 of section 469.451; 8
(2) [All of] The [trustee's] fiduciary's compensation 9
calculated on principal as a fee for acceptance, 10
distribution, or termination[, and disbursements made to 11
prepare property for sale ]; 12
(3) [Payments] A payment of an expense to prepare for 13
or execute a sale or other disposition of property; 14
(4) A payment on the principal of a trust debt; 15
[(4) Expenses of a] (5) A payment of an expense of an 16
accounting, judicial or nonjudicial proceeding, or other 17
matter that [concerns] involves primarily [an interest in] 18
principal, including a proceeding to construe the terms of 19
the trust or protect property ; 20
[(5) Premiums paid on a policy of] (6) A payment of a 21
premium for insurance, including title insurance, not 22
described in subdivision (4) of section 469.451 of which the 23
[trust] fiduciary is the owner and beneficiary; 24
[(6)] (7) A payment of an estate[,] or inheritance 25
[and other transfer taxes ] tax or other tax imposed because 26
of the death of a decedent , including penalties, apportioned 27
to the trust; and 28
[(7) Extraordinary expenses incurred in connection 29
with the management and preservation of trust propert y; 30
(8) Expenses for a capital improvement to a principal 31
asset, whether in the form of changes to an existing asset 32
or the construction of a new asset, including special 33
assessments; and 34
(9) Disbursements] (8) A payment: 35
(a) Related to environmental matters, including : 36 SB 246 62
a. Reclamation[,]; 37
b. Assessing environmental conditions [,]; 38
c. Remedying and removing environmental 39
contamination[,]; 40
d. Monitoring remedial activities and the release of 41
substances[,]; 42
e. Preventing future releases of substances [,]; 43
f. Collecting amounts from persons liable or 44
potentially liable for the costs of [those] activities[,] 45
described in subparagraphs a. to e. of this paragraph; 46
g. Penalties imposed under env ironmental laws or 47
regulations [and]; 48
h. Other [payments made] actions to comply with 49
[those] environmental laws or regulations[,]; 50
i. Statutory or common law claims by third parties [,]; 51
and 52
j. Defending claims based on environmenta l matters; and 53
(b) For a premium for insurance for matters described 54
in paragraph (a) of this subdivision . 55
2. If a principal asset is encumbered with an 56
obligation that requires income from [that] the asset to be 57
paid directly to [the] a creditor, the [trustee] fiduciary 58
shall transfer from principal to income an amount equal to 59
the income paid to the creditor in reduction of the 60
principal balance of the obligation. 61
469.455. 1. As used in this section, the term 1
"depreciation" means a reduction in value due to wear, tear, 2
decay, corrosion, or gradual obsolescence of a [fixed] 3
tangible asset having a useful life of more than one year. 4
2. A [trustee] fiduciary may transfer to principal a 5
reasonable amount of the net cash receipts from a principal 6 SB 246 63
asset that is subject to depreciation, but [may] shall not 7
transfer any amount for depreciation: 8
(1) Of [that portion] the part of real property used 9
or available for use by a beneficiary as a residence [or]; 10
(2) Of tangible personal property held or made 11
available for the personal use or enjoyment of a beneficiary; 12
[(2) During the administration of a decedent's 13
estate;] or 14
(3) [Pursuant to] Under this section [if the trustee 15
is accounting pursuant], to the extent the fiduciary 16
accounts: 17
(a) Under section 469.439 for the asset; or 18
(b) Under section 469.427 for the business or other 19
activity in which the asset is used. 20
3. An amount transferred to principal under this 21
section need not be separately held [as a separate fund]. 22
469.456. 1. If a fiduciary makes or expects to make 1
an income disbursement described in subsection 2 of this 2
section, the fiduciary may transfer an appropriate amount 3
from principal to income in one or more accounting periods 4
to reimburse income. 5
2. To the extent the fiduciary has not been and does 6
not expect to be reimbursed by a third party, income 7
disbursements to which subsection 1 of this section applies 8
include: 9
(1) An amount chargeable to principal but paid from 10
income because principal is illiquid; 11
(2) A disbursement made to prepare property for sale, 12
including improvements and commissions; and 13
(3) A disbursement described in subsection 1 of 14
section 469.453. 15 SB 246 64
3. If an asset whose ownership gives rise to an income 16
disbursement becomes subject to a successive interest after 17
an income interest ends, the fiduciary may continue to make 18
transfers under subsection 1 of this section. 19
469.457. 1. If a [trustee] fiduciary makes or expects 1
to make a principal disbursement described in subsection 2 2
of this section, the [trustee] fiduciary may transfer an 3
appropriate amount from income to principal in one or more 4
accounting periods to reimburse principal or [to] provide a 5
reserve for future principal disbursements. 6
2. To the extent a fiduciary has not been and does not 7
expect to be reimbursed by a third party, principal 8
disbursements to which subsection 1 of this sectio n applies 9
include [the following, but only to the extent that the 10
trustee has not been and does not expect to be reimbursed by 11
a third party]: 12
(1) An amount chargeable to income but paid from 13
principal because [it] income is [unusually large, inc luding 14
extraordinary repairs ] not sufficient; 15
(2) [Disbursements] The cost of an improvement to 16
principal, whether a change to an existing asset or the 17
construction of a new asset, including a special assessment; 18
(3) A disbursement made to prepare property for 19
rental, including tenant allowances, leasehold improvements, 20
and [broker's] commissions; 21
[(3)] (4) A periodic [payments] payment on an 22
obligation secured by a principal asset , to the extent 23
[that] the amount transferred from i ncome to principal for 24
depreciation is less than the periodic [payments] payment; 25
and 26
[(4) Disbursements] (5) A disbursement described in 27
[subdivision (7) of] subsection 1 of section 469.453. 28 SB 246 65
3. If [the] an asset whose ownership gives rise to 29
[the disbursements] a principal disbursement becomes subject 30
to a successive [income] interest after an income interest 31
ends, [a trustee] the fiduciary may continue to [transfer 32
amounts from income to principal as provided in ] make 33
transfers under subsection 1 of this section. 34
469.459. 1. A tax required to be paid by a [trustee] 1
fiduciary that is based on receipts allocated to income 2
shall be paid from income. 3
2. A tax required to be paid by a [trustee] fiduciary 4
that is based on receipts allocated to principal shall be 5
paid from principal, even if the tax is called an income tax 6
by the taxing authority. 7
3. Subject to subsection 4 of this section and 8
sections 469.456, 469.457, and 469.462, a tax required to be 9
paid by a [trustee] fiduciary on [the trust's] a share of an 10
entity's taxable income in an accounting period shall be 11
paid from: 12
(1) [From] Income and principal proportionately to the 13
[extent that] allocation between income and principal of 14
receipts from the entity [are allocated to income ] in the 15
accounting period; and 16
(2) [From] Principal to the extent [that] the tax 17
exceeds the receipts from the entity [are allocated only to 18
principal] in the accounting period . 19
4. After applying subsections 1 to 3 of this section, 20
[the trustee] a fiduciary shall adjust income or principal 21
receipts, to the extent [that] the [trust's] taxes the 22
fiduciary pays are reduced because [the trust receives] of a 23
deduction for a payment made to a benefic iary. 24
469.462. 1. A fiduciary may make an adjustment 1
between income and principal to offset the shifting of 2 SB 246 66
economic interests or tax benefits between current income 3
beneficiaries and successor beneficiaries that arises from: 4
(1) An election or decision the fiduciary makes 5
regarding a tax matter, other than a decision to claim an 6
income tax deduction to which subsection 2 of this section 7
applies; 8
(2) An income tax or other tax imposed on the 9
fiduciary or a beneficiary as a result of a transaction 10
involving the fiduciary or a distribution by the fiduciary; 11
or 12
(3) Ownership by the fiduciary of an interest in an 13
entity, a part of whose taxable income, whether or not 14
distributed, is includable in the taxable inco me of the 15
fiduciary or a beneficiary. 16
2. If the amount of an estate tax marital or 17
charitable deduction is reduced because a fiduciary deducts 18
an amount paid from principal for income tax purposes 19
instead of deducting it for estate tax purposes a nd, as a 20
result, estate taxes paid from principal are increased and 21
income taxes paid by the fiduciary or a beneficiary are 22
decreased, the fiduciary shall charge each beneficiary that 23
benefits from the decrease in income tax to reimburse the 24
principal from which the increase in estate tax is paid. 25
The total reimbursement shall equal the increase in the 26
estate tax, to the extent the principal used to pay the 27
increase would have qualified for a marital or charitable 28
deduction but for the payment. The share of the 29
reimbursement for each fiduciary or beneficiary whose income 30
taxes are reduced shall be the same as its share of the 31
total decrease in income tax. 32
3. A fiduciary that charges a beneficiary under 33
subsection 2 of this section may of fset the charge by 34 SB 246 67
obtaining payment from the beneficiary, withholding an 35
amount from future distributions to the beneficiary, or 36
adopting another method or combination of methods. 37
469.463. In applying and construing sections [469.401] 1
469.399 to [469.467] 469.487, consideration shall be given 2
to the need to promote uniformity of the law with respect to 3
its subject matter among states that enact it. 4
469.464. The provisions of sections 469.399 to 469.487 1
modify, limit, or supersede the Electronic Signatures in 2
Global and National Commerce Act, 15 U.S.C. Section 7001, et 3
seq., but do not modify, limit, or supersede 15 U.S.C. 4
Section 7001(c) or authorize electronic delivery of any of 5
the notices described in 15 U.S.C. Section 7003(b). 6
469.465. If any provision of sections [469.401] 1
469.399 to [469.467] 469.487 or [the] its application [of 2
these sections] to any person or circumstance is held 3
invalid, the invalidity does not affect other pr ovisions or 4
applications of sections [469.401] 469.399 to [469.467] 5
469.487 which can be given effect without the invalid 6
provision or application and to this end, the provisions of 7
sections 469.399 to 469.487 are severable . 8
469.467. The provisions of sections [469.401] 469.399 1
to [469.467] 469.487 apply to [every] a trust or 2
[decedent's] estate existing or created on or after August 3
28, [2001] 2025, except as otherwise expressly provided in 4
the [will or] terms of the trust or [in] sections [469.401] 5
469.399 to [469.467] 469.487. 6
469.471. As used in sections 469.471 to 469.487, the 1
following terms mean: 2
(1) "Applicable value", the amount of the net fair 3
market value of a trust taken into account under section 4
469.483; 5 SB 246 68
(2) "Express unitrust", a trust for which, under the 6
terms of the trust without regard to sections 469.471 to 7
469.487, income or net income shall or may be calculated as 8
a unitrust amount; 9
(3) "Income trust", a trust that i s not a unitrust; 10
(4) "Net fair market value of a trust", the fair 11
market value of the assets of the trust, less the 12
noncontingent liabilities of the trust; 13
(5) "Unitrust", a trust for which net income is a 14
unitrust amount. The term "unitrust" includes an express 15
unitrust; 16
(6) "Unitrust amount", an amount computed by 17
multiplying a determined value of a trust by a determined 18
percentage. For a unitrust administered under a unitrust 19
policy, the term "unitrust amount" means the applic able 20
value multiplied by the unitrust rate; 21
(7) "Unitrust policy", a policy described in sections 22
469.479 to 469.487 and adopted under section 469.475; 23
(8) "Unitrust rate", the rate used to compute the 24
unitrust amount for a unitrust administ ered under a unitrust 25
policy. 26
469.473. 1. Except as otherwise provided in 1
subsection 2 of this section, sections 469.471 to 469.487 2
apply to: 3
(1) An income trust, unless the terms of the trust 4
expressly prohibit use of sectio ns 469.471 to 469.487 by a 5
specific reference to these sections or an explicit 6
expression of intent that net income not be calculated as a 7
unitrust amount; and 8
(2) An express unitrust, except to the extent the 9
terms of the trust explicitly: 10 SB 246 69
(a) Prohibit use of sections 469.471 to 469.487 by a 11
specific reference to such sections; 12
(b) Prohibit conversion to an income trust; or 13
(c) Limit changes to the method of calculating the 14
unitrust amount. 15
2. Sections 469.471 to 469.487 do not apply to a trust 16
described in 26 U.S.C. Section 170(f)(2)(B), 642(c)(5), 17
664(d), 2702(a)(3)(A)(ii) or (iii), or 2702(b), as amended. 18
3. An income trust to which sections 469.471 to 19
469.487 apply under subdivision (1) of subsection 1 of thi s 20
section may be converted to a unitrust under sections 21
469.471 to 469.487 regardless of the terms of the trust 22
concerning distributions. Conversion to a unitrust under 23
sections 469.471 to 469.487 does not affect other terms of 24
the trust concerning d istributions of income or principal. 25
4. Sections 469.471 to 469.487 apply to an estate only 26
to the extent a trust is a beneficiary of the estate. To 27
the extent of the trust's interest in the estate, the estate 28
may be administered as a unitrust, t he administration of the 29
estate as a unitrust may be discontinued, or the percentage 30
or method used to calculate the unitrust amount may be 31
changed, in the same manner as for a trust under sections 32
469.471 to 469.487. 33
5. Sections 469.471 to 469.4 87 do not create a duty to 34
take or consider action under sections 469.471 to 469.487 or 35
to inform a beneficiary about the applicability of sections 36
469.471 to 469.487. 37
6. A fiduciary that in good faith takes or fails to 38
take an action under secti ons 469.471 to 469.487 is not 39
liable to a person affected by the action or inaction. 40
469.475. 1. A fiduciary, without court approval, by 1
complying with subsections 2 and 6 of this section, may: 2 SB 246 70
(1) Convert an income trust to a unitrust if the 3
fiduciary adopts in a record a unitrust policy for the trust 4
providing: 5
(a) That, in administering the trust, the net income 6
of the trust will be a unitrust amount rather than net 7
income determined without regard to sections 469.4 71 to 8
469.487; and 9
(b) The percentage and method used to calculate the 10
unitrust amount; 11
(2) Change the percentage or method used to calculate 12
a unitrust amount for a unitrust if the fiduciary adopts in 13
a record a unitrust policy or an amend ment or replacement of 14
a unitrust policy providing changes in the percentage or 15
method used to calculate the unitrust amount; or 16
(3) Convert a unitrust to an income trust if the 17
fiduciary adopts in a record a determination that, in 18
administering the trust, the net income of the trust will be 19
net income determined without regard to sections 469.471 to 20
469.487 rather than a unitrust amount. 21
2. A fiduciary may take an action under subsection 1 22
of this section if: 23
(1) The fiduciary determines that the action will 24
assist the fiduciary to administer a trust impartially; 25
(2) The fiduciary sends a notice in a record, in the 26
manner required by section 469.477, describing and proposing 27
to take the action; 28
(3) The fiduciary sends a copy of the notice under 29
subdivision (2) of this subsection to each settlor of the 30
trust that is: 31
(a) If an individual, living; or 32
(b) If not an individual, in existence; 33 SB 246 71
(4) At least one member of each class of the qualified 34
beneficiaries described under section 456.1 -103 receiving 35
the notice under subdivision (2) of this subsection is: 36
(a) If an individual, legally competent; 37
(b) If not an individual, in existence; or 38
(c) Represented in the manner provided in sub section 2 39
of section 469.477; and 40
(5) The fiduciary does not receive, by the date 41
specified in the notice under subdivision (5) of subsection 42
4 of section 469.477, an objection in a record to the action 43
proposed under subdivision (2) of this subs ection from a 44
person to which the notice under subdivision (2) of this 45
subsection is sent. 46
3. If a fiduciary receives, not later than the date 47
stated in the notice under subdivision (5) of subsection 4 48
of section 469.477, an objection in a record described in 49
subdivision (4) of subsection 4 of section 469.477 to a 50
proposed action, the fiduciary or a beneficiary may request 51
the court to have the proposed action taken as proposed, 52
taken with modifications, or prevented. A person described 53
in subsection 1 of section 469.477 may oppose the proposed 54
action in the proceeding under this subsection, whether or 55
not the person: 56
(1) Consented under subsection 3 of section 469.477; or 57
(2) Objected under subdivision (4) of subsection 4 of 58
section 469.477. 59
4. If, after sending a notice under subdivision (2) of 60
subsection 2 of this section, a fiduciary decides not to 61
take the action proposed in the notice, the fiduciary shall 62
notify in a record each person described in subsection 1 of 63
section 469.477 of the decision not to take the action and 64
the reasons for the decision. 65 SB 246 72
5. If a beneficiary requests in a record that a 66
fiduciary take an action described in subsection 1 of this 67
section and the fiduciary declines to act or does not act 68
within ninety days after receiving the request, the 69
beneficiary may request the court to direct the fiduciary to 70
take the action requested. 71
6. In deciding whether and how to take an action 72
authorized by subsection 1 of this section, or w hether and 73
how to respond to a request by a beneficiary under 74
subsection 5 of this section, a fiduciary shall consider all 75
factors relevant to the trust and the beneficiaries, 76
including relevant factors in subsection 5 of section 77
469.403. 78
7. A fiduciary may release or delegate the power to 79
convert an income trust to a unitrust under subdivision (1) 80
of subsection 1 of this section, change the percentage or 81
method used to calculate a unitrust amount under subdivision 82
(2) of subsection 1 of this section, or convert a unitrust 83
to an income trust under subdivision (3) of subsection 1 of 84
this section, for a reason described in subsection 7 of 85
section 469.405 and in the manner described in subsection 8 86
of section 469.405. 87
469.477. 1. A notice required by subdivision (3) of 1
subsection 2 of section 469.475 shall be sent in a manner 2
authorized under section 456.1 -109 to: 3
(1) The qualified beneficiaries defined in section 4
456.1-103; 5
(2) Each person acting as trust p rotector under 6
section 456.8-808; and 7
(3) Each person that is granted a power over the trust 8
by the terms of the trust, to the extent the power is 9
exercisable when the person is not then serving as a trustee: 10 SB 246 73
(a) Including a: 11
a. Power over the investment, management, or 12
distribution of trust property or other matters of trust 13
administration; and 14
b. Power to appoint or remove a trustee or person 15
described in this paragraph; and 16
(b) Excluding a: 17
a. Power of appointment; 18
b. Power of a beneficiary over the trust, to the 19
extent the exercise or nonexercise of the power affects the 20
beneficial interest of the beneficiary or another 21
beneficiary represented by the beneficiary under sections 22
456.3-301 to 456.3-305 with respect to the exercise or 23
nonexercise of the power; and 24
c. Power over the trust if the terms of the trust 25
provide that the power is held in a nonfiduciary capacity 26
and the power shall be held in a nonfiduciary capacity to 27
achieve a tax objecti ve under 26 U.S.C., as amended. 28
2. The representation provisions of sections 456.3 -301 29
to 456.3-305 apply to notice under this section. 30
3. A person may consent in a record at any time to 31
action proposed under subdivision (2) of subsection 2 o f 32
section 469.475. A notice required by subdivision (2) of 33
subsection 2 of section 469.475 need not be sent to a person 34
that consents under this subsection. 35
4. A notice required by subdivision (2) of subsection 36
2 of section 469.475 shall include : 37
(1) The action proposed under subdivision (2) of 38
subsection 2 of section 469.475; 39
(2) For a conversion of an income trust to a unitrust, 40
a copy of the unitrust policy adopted under subdivision (1) 41
of subsection 1 of section 469.475; 42 SB 246 74
(3) For a change in the percentage or method used to 43
calculate the unitrust amount, a copy of the unitrust policy 44
or amendment or replacement of the unitrust policy adopted 45
under subdivision (2) of subsection 1 of section 469.475; 46
(4) A statement that the person to which the notice is 47
sent may object to the proposed action by stating in a 48
record the basis for the objection and sending or delivering 49
the record to the fiduciary; 50
(5) The date by which an objection under subdivision 51
(4) shall be received by the fiduciary, which shall be at 52
least thirty days after the date the notice is sent; 53
(6) The date on which the action is proposed to be 54
taken and the date on which the action is proposed to take 55
effect; 56
(7) The name and contact information of the fiduciary; 57
and 58
(8) The name and contact information of a person that 59
may be contacted for additional information. 60
469.479. 1. In administering a unitrust under 1
sections 469.471 to 469.487, a fiduciary sh all follow a 2
unitrust policy adopted under subdivision (1) or (2) of 3
subsection 1 of section 469.475 or amended or replaced under 4
subdivision (2) of section 1 of section 469.475. 5
2. A unitrust policy shall provide: 6
(1) The unitrust rate or t he method for determining 7
the unitrust rate under section 469.481; 8
(2) The method for determining the applicable value 9
under section 469.483; and 10
(3) The rules described in sections 469.481 to 469.487 11
that apply in the administration of the unitrust, whether 12
the rules are: 13 SB 246 75
(a) Mandatory, as provided in subsection 1 of section 14
469.483 and subsection 1 of section 469.485; or 15
(b) Optional, as provided in section 469.481, 16
subsection 2 of section 469.483, subsection 2 of section 17
469.485, and subsection 1 of section 469.487, to the extent 18
the fiduciary elects to adopt such rules. 19
469.481. 1. Except as otherwise provided in 1
subdivision (1) of subsection 2 of section 469.487, a 2
unitrust rate may be: 3
(1) A fixed unitrust rate; or 4
(2) A unitrust rate that is determined for each period 5
using: 6
(a) A market index or other published data; or 7
(b) A mathematical blend of market indices or other 8
published data over a stated number of preceding pe riods. 9
2. Except as otherwise provided in subdivision (1) of 10
subsection 2 of section 469.487, a unitrust policy may 11
provide: 12
(1) A limit on how high the unitrust rate determined 13
under subdivision (2) of subsection 1 of this section may 14
rise; 15
(2) A limit on how low the unitrust rate determined 16
under subdivision (2) of subsection 1 of this section may 17
fall; 18
(3) A limit on how much the unitrust rate determined 19
under subdivision (2) of subsection 1 of this section may 20
increase over the unitrust rate for the preceding period or 21
a mathematical blend of unitrust rates over a stated number 22
of preceding periods; 23
(4) A limit on how much the unitrust rate determined 24
under subdivision (2) of subsection 1 of this section may 25
decrease below the unitrust rate for the preceding period or 26 SB 246 76
a mathematical blend of unitrust rates over a stated number 27
of preceding periods; or 28
(5) A mathematical blend of any of the unitrust rates 29
determined under subdivision (2) of subsection 1 of this 30
section and subdivisions (1) to (4) of this subsection. 31
469.483. 1. A unitrust policy shall provide the 1
method for determining the fair market value of an asset for 2
the purpose of determining the unitrust amount, including: 3
(1) The frequency of valuing the asset, which need not 4
require a valuation in every period; and 5
(2) The date for valuing the asset in each period in 6
which the asset is valued. 7
2. Except as otherwise provided in subdivision (2) of 8
subsection 2 of section 469.487, a unitrust policy may 9
provide methods for determining the amount of the net fair 10
market value of the trust to take into account in 11
determining the applicable value, including: 12
(1) Obtaining an appraisal of an asset for wh ich fair 13
market value is not readily available; 14
(2) Exclusion of specific assets or groups or types of 15
assets; 16
(3) Other exceptions or modifications of the treatment 17
of specific assets or groups or types of assets; 18
(4) Identification and treatment of cash or property 19
held for distribution; 20
(5) Use of: 21
(a) An average of fair market values over a stated 22
number of preceding periods; or 23
(b) Another mathematical blend of fair market values 24
over a stated number of precedi ng periods; 25 SB 246 77
(6) A limit on how much the applicable value of all 26
assets, groups of assets, or individual assets may increase 27
over: 28
(a) The corresponding applicable value for the 29
preceding period; or 30
(b) A mathematical blend of applicabl e values over a 31
stated number of preceding periods; 32
(7) A limit on how much the applicable value of all 33
assets, groups of assets, or individual assets may decrease 34
below: 35
(a) The corresponding applicable value for the 36
preceding period; or 37
(b) A mathematical blend of applicable values over a 38
stated number of preceding periods; 39
(8) The treatment of accrued income and other features 40
of an asset that affect value; and 41
(9) Determining the liabilities of the trust, 42
including treatment of liabilities to conform with the 43
treatment of assets under subdivisions (1) to (8) of this 44
subsection. 45
469.485. 1. A unitrust policy shall provide the 1
period used under sections 469.481 and 469.483. Except as 2
otherwise provided in subdivision (3) of subsection 2 of 3
section 469.481, the period may be: 4
(1) A calendar year; 5
(2) A twelve-month period other than a calendar year; 6
(3) A calendar quarter; 7
(4) A three-month period other than a calendar 8
quarter; or 9
(5) Another period. 10
2. Except as otherwise provided in subsection 2 of 11
section 469.487, a unitrust policy may provide standards for: 12 SB 246 78
(1) Using fewer preceding periods under paragraph (b) 13
of subdivision (2) of subsection 1 of section 469.481 or 14
subdivision (3) or (4) of subsection 2 of section 469.481 if: 15
(a) The trust was not in existence in a preceding 16
period; or 17
(b) Market indices or other published data are not 18
available for a preceding period; 19
(2) Using fewer preceding periods under paragraph (a) 20
or (b) of subdivision (5) of subsection 2 of section 21
469.483, paragraph (b) of subdivision (6) of subsection 2 of 22
section 469.483, or paragraph (b) of subdivision (7) of 23
subsection 2 of section 469.483 if: 24
(a) The trust was not in existence in a preceding 25
period; or 26
(b) Fair market values are not available for a 27
preceding period; and 28
(3) Prorating the unitrust amount on a daily basis for 29
a part of a period in which the trust or the admin istration 30
of the trust as a unitrust or the interest of any 31
beneficiary commences or terminates. 32
469.487. 1. A unitrust policy may: 1
(1) Provide methods and standards for: 2
(a) Determining the timing of distributions; 3
(b) Making distributions in cash or in kind or partly 4
in cash and partly in kind; or 5
(c) Correcting an underpayment or overpayment to a 6
beneficiary based on the unitrust amount if there is an 7
error in calculating the unitrust amount; 8
(2) Specify sources and the order of sources, 9
including categories of income for federal income tax 10
purposes, from which distributions of a unitrust amount are 11
paid; or 12 SB 246 79
(3) Provide other standards and rules the fiduciary 13
determines serve the interests of the beneficiaries. 14
2. If a trust qualifies for a special tax benefit or a 15
fiduciary is not an independent person: 16
(1) The unitrust rate established under section 17
469.481 shall not be less than three percent or more than 18
five percent; 19
(2) The only provisions of section 469.483 that apply 20
are subsection 1 of section 469.483; subdivisions (1), (4), 21
and (9) of subsection 2 of section 469.483; and paragraph 22
(a) of subdivision (5) of subsection 2 of section 469.483; 23
(3) The only period that may be used under section 24
469.485 is a calendar year under subdivision (1) of 25
subsection 1 of section 469.485; and 26
(4) The only other provisions of section 469.485 that 27
apply are paragraph (a) of subdivision (2) of subsection 2 28
of section 469.485 and subdivision (3) of subsection 2 of 29
section 469.485. 30
[469.409. 1. Any claim for breach of a 1
trustee's duty to impartially administer a trust 2
related, directly or indirectly, to an 3
adjustment made by a fiduciary to th e allocation 4
between principal and income pursuant to 5
subsection 1 of section 469.405 or any 6
allocation made by the fiduciary pursuant to any 7
authority or discretion specified in subsection 8
1 of section 469.403, unless previously barred 9
by adjudication, consent or other limitation, 10
shall be barred as provided in this section. 11
(1) Any such claim brought by a qualified 12
beneficiary is barred if not asserted in a 13
judicial proceeding commenced within two years 14
after the trustee has sent a report to that 15
qualified beneficiary that adequately discloses 16
the facts constituting the claim. 17
(2) Any such claim brought by a 18
beneficiary (other than a qualified beneficiary) 19 SB 246 80
with any interest whatsoever in the trust, no 20
matter how remote or conting ent, or whether or 21
not the beneficiary is ascertainable or has the 22
capacity to contract, is barred if not asserted 23
in a judicial proceeding commenced within two 24
years after the first to occur of: 25
(a) The date the trustee sent a report to 26
all qualified beneficiaries that adequately 27
discloses the facts constituting the claim; or 28
(b) The date the trustee sent a report to 29
a person that represents the beneficiary under 30
the provisions of subdivision (2) of subsection 31
2 of this section. 32
2. For purposes of this section the 33
following rules shall apply: 34
(1) A report adequately discloses the 35
facts constituting a claim if it provides 36
sufficient information so that the beneficiary 37
should know of the claim or reasonably should 38
have inquired into its existence; 39
(2) Section 469.402 shall apply in 40
determining whether a beneficiary (including a 41
qualified beneficiary) has received notice for 42
purposes of this section; 43
(3) The determination of the identity of 44
all qualified beneficiaries shall be made on the 45
date the report is deemed to have been sent; and 46
(4) This section does not preclude an 47
action to recover for fraud or misrepresentation 48
related to the report. ] 49
[469.411. 1. (1) If the provisions of 1
this section apply to a trust, the unitrust 2
amount determined for each accounting year of 3
the trust shall be a percentage between three 4
and five percent of the average net fair market 5
value of the trust, as of the first day of the 6
trust's current accounting year. The percentage 7
applicable to a trust shall be that percentage 8
specified by the terms of the governing 9
instrument or by the election made in accordance 10
with subdivision (2) of subsection 5 of this 11
section. 12 SB 246 81
(2) The unitrust amount for the current 13
accounting year computed pursuant to this 14
section shall be proportionately reduced for any 15
distributions, in whole or in part, other than 16
distributions of the unitrust amount, and for 17
any payments of expenses, including debts, 18
disbursements and taxes, from the trust within a 19
current accounting year that the trustee 20
determines to be material and substantial, and 21
shall be proportionately increased for the 22
receipt, other than a receipt that represents a 23
return on investment, of a ny additional property 24
into the trust within a current accounting year. 25
(3) For purposes of this section, the net 26
fair market values of the assets held in the 27
trust on the first business day of a prior 28
accounting quarter shall be adjusted to refl ect 29
any reduction, in the case of a distribution or 30
payment, or increase, in the case of a receipt, 31
for the prior accounting year pursuant to 32
subdivision (1) of this subsection, as if the 33
distribution, payment or receipt had occurred on 34
the first day of the prior accounting year. 35
(4) In the case of a short accounting 36
period, the trustee shall prorate the unitrust 37
amount on a daily basis. 38
(5) In the case where the net fair market 39
value of an asset held in the trust has been 40
incorrectly determined in any quarter, the 41
unitrust amount shall be increased in the case 42
of an undervaluation, or be decreased in the 43
case of an overvaluation, by an amount equal to 44
the difference between the unitrust amount 45
determined based on the correct valua tion of the 46
asset and the unitrust amount originally 47
determined. 48
2. As used in this section, the following 49
terms mean: 50
(1) "Average net fair market value", a 51
rolling average of the fair market value of the 52
assets held in the trust on the f irst business 53
day of the lessor of the number of accounting 54
quarters of the trust from the date of inception 55
of the trust to the determination of the trust's 56 SB 246 82
average net fair market value, or twelve 57
accounting quarters of the trust, regardless of 58
whether this section applied to the 59
ascertainment of net income for all valuation 60
quarters; 61
(2) "Current accounting year", the 62
accounting period of the trust for which the 63
unitrust amount is being determined. 64
3. In determining the average net fair 65
market value of the assets held in the trust, 66
there shall not be included the value of: 67
(1) Any residential property or any 68
tangible personal property that, as of the first 69
business day of the current valuation year, one 70
or more income beneficiaries of the trust have 71
or had the right to occupy, or have or had the 72
right to possess or control, other than in a 73
capacity as trustee, and instead the right of 74
occupancy or the right to possession or control 75
shall be deemed to be the unitrust am ount with 76
respect to the residential property or the 77
tangible personal property; or 78
(2) Any asset specifically given to a 79
beneficiary under the terms of the trust and the 80
return on investment on that asset, which return 81
on investment shall be di stributable to the 82
beneficiary. 83
4. In determining the average net fair 84
market value of the assets held in the trust 85
pursuant to subsection 1 of this section, the 86
trustee shall, not less often than annually, 87
determine the fair market value of eac h asset of 88
the trust that consists primarily of real 89
property or other property that is not traded on 90
a regular basis in an active market by appraisal 91
or other reasonable method or estimate, and that 92
determination, if made reasonably and in good 93
faith, shall be conclusive as to all persons 94
interested in the trust. Any claim based on a 95
determination made pursuant to this subsection 96
shall be barred if not asserted in a judicial 97
proceeding brought by any beneficiary with any 98
interest whatsoever in the trust within two 99
years after the trustee has sent a report to all 100 SB 246 83
qualified beneficiaries that adequately 101
discloses the facts constituting the claim. The 102
rules set forth in subsection 2 of section 103
469.409 shall apply to the barring of claims 104
pursuant to this subsection. 105
5. This section shall apply to the 106
following trusts: 107
(1) Any trust created after August 28, 108
2001, with respect to which the terms of the 109
trust clearly manifest an intent that this 110
section apply; 111
(2) Any trust created under an instrument 112
that became irrevocable on, before, or after 113
August 28, 2001, if the trustee, in the 114
trustee's discretion, elects to have this 115
section apply unless the instrument creating the 116
trust specifically prohibits an election under 117
this subdivision. The trustee shall deliver 118
notice to all qualified beneficiaries and the 119
settlor of the trust, if he or she is then 120
living, of the trustee's intent to make such an 121
election at least sixty days before making that 122
election. The trustee shall have sole authority 123
to make the election. Section 469.402 shall 124
apply for all purposes of this subdivision. An 125
action or order by any court shall not be 126
required. The election shall be made by a 127
signed writing delivered to the settlor of the 128
trust, if he or she is then living, and to all 129
qualified beneficiaries. The election is 130
irrevocable, unless revoked by order of the 131
court having jurisdiction of the trust. The 132
election may specify the percentage used to 133
determine the unitrust a mount pursuant to this 134
section, provided that such percentage is 135
between three and five percent, or if no 136
percentage is specified, then that percentage 137
shall be three percent. In making an election 138
pursuant to this subsection, the trustee shall 139
be subject to the same limitations and 140
conditions as apply to an adjustment between 141
income and principal pursuant to subsections 3 142
and 4 of section 469.405; and 143 SB 246 84
(3) No action of any kind based on an 144
election made by a trustee pursuant to 145
subdivision (2) of this subsection shall be 146
brought against the trustee by any beneficiary 147
of that trust three years from the effective 148
date of that election. 149
6. (1) Once the provisions of this 150
section become applicable to a trust, the net 151
income of the trust shall be the unitrust amount. 152
(2) Unless otherwise provided by the 153
governing instrument, the unitrust amount 154
distributed each year shall be paid from the 155
following sources for that year up to the full 156
value of the unitrust amount in the foll owing 157
order: 158
(a) Net income as determined if the trust 159
were not a unitrust; 160
(b) Other ordinary income as determined 161
for federal income tax purposes; 162
(c) Assets of the trust principal for 163
which there is a readily available market value ; 164
and 165
(d) Other trust principal. 166
(3) Additionally, the trustee may allocate 167
to trust income for each taxable year of the 168
trust, or portion thereof: 169
(a) Net short-term capital gain described 170
in the Internal Revenue Code, 26 U.S.C. Sect ion 171
1222(5), for such year, or portion thereof, but 172
only to the extent that the amount so allocated 173
together with all other amounts to trust income, 174
as determined under the provisions of this 175
chapter without regard to this section, for such 176
year, or portion thereof, does not exceed the 177
unitrust amount for such year, or portion 178
thereof; 179
(b) Net long-term capital gain described 180
in the Internal Revenue Code, 26 U.S.C. Section 181
1222(7), for such year, or portion thereof, but 182
only to the extent t hat the amount so allocated 183
together with all other amounts, including 184
amounts described in paragraph (a) of this 185
subdivision, allocated to trust income for such 186
year, or portion thereof, does not exceed the 187 SB 246 85
unitrust amount for such year, or portion 188
thereof. 189
7. A trust with respect to which this 190
section applies on August 28, 2011, may 191
calculate the unitrust amount in accordance with 192
the provisions of this section, as it existed 193
either before or after such date, as the trustee 194
of such trust shall determine in a writing kept 195
with the records of the trust in the trustee's 196
discretion.] 197
[469.461. 1. A fiduciary may make 1
adjustments between principal and income to 2
offset the shifting of economic interests or tax 3
benefits between income beneficiaries and 4
remainder beneficiaries which arise from: 5
(1) Elections and decisions, other than 6
those described in subsection 2 of this section, 7
that the fiduciary makes from time to time 8
regarding tax matters; 9
(2) An income tax or any other tax that is 10
imposed upon the fiduciary or a beneficiary as a 11
result of a transaction involving or a 12
distribution from the estate or trust; or 13
(3) The ownership by an estate or trust of 14
an interest in an entity whose taxable i ncome, 15
whether or not distributed, is includable in the 16
taxable income of the estate, trust or a 17
beneficiary. 18
2. If the amount of an estate tax marital 19
deduction or charitable contribution deduction 20
is reduced because a fiduciary deducts an amou nt 21
paid from principal for income tax purposes 22
instead of deducting it for estate tax purposes, 23
and as a result estate taxes paid from principal 24
are increased and income taxes paid by an 25
estate, trust or beneficiary are decreased, each 26
estate, trust or beneficiary that benefits from 27
the decrease in income tax shall reimburse the 28
principal from which the increase in estate tax 29
is paid. The total reimbursement shall equal 30
the increase in the estate tax to the extent 31
that the principal used to pay the increase 32
would have qualified for a marital deduction or 33 SB 246 86
charitable contribution deduction but for the 34
payment. The proportionate share of the 35
reimbursement for each estate, trust or 36
beneficiary whose income taxes are reduced shall 37
be the same as its proportionate share of the 38
total decrease in income tax. An estate or 39
trust shall reimburse principal from income. ] 40
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