14-11015

14-11015. Express total return unitrusts;
definition

A. A unitrust amount may be determined by reference to the net fair market
value of the trust's assets in one year or more than one year.

B. Distribution of a fixed percentage unitrust amount is considered a distribution
of all of the income of the total return unitrust and is not a fundamental departure from
applicable state law, regardless of whether the total return unitrust is created and
governed pursuant to section 14-11014 or by the terms of the governing instrument.

C. An express total return unitrust may provide a mechanism for changing the
unitrust percentage similar to the mechanism provided under section 14-11014 based on the
factors prescribed in that section and may provide for a change from a unitrust to an
income trust similar to the mechanism prescribed pursuant to section 14-11014.

D. If an express total return unitrust does not specifically or by reference to
section 14-11014 grant a power to change the unitrust percentage or change to an income
trust, the trustee shall have no such power.

E. A distribution of the fixed percentage of not less than three per cent nor more
than five per cent reasonably apportions the total return of a total return unitrust.

F. An express total return unitrust that provides for a fixed percentage payout in
excess of five per cent per year is considered to have paid out all of the income of the
total return unitrust and to have paid out principal of the trust to the extent that the
fixed percentage payout exceeds five per cent per year.

G. The trust document may grant discretion to the trustee to adopt a consistent
practice of treating capital gains as part of the unitrust distribution, to the extent
that the unitrust distribution exceeds the net accounting income, or it may specify the
ordering of these classes of income.

H. Unless the terms of the trust specifically provide otherwise, a distribution of
the unitrust amount is considered to have been made from the following sources in order
of priority:

1. From net accounting income determined as if the trust were not a unitrust.

2. From ordinary income not allocable to net accounting income.

3. From net realized short-term capital gains.

4. From net realized long-term capital gains.

5. From the principal of the trust estate.

I. The trust document may provide that assets used by the trust beneficiary, such
as a residence property or tangible personal property, may be excluded from the net fair
market value for computing the unitrust amount. This use may be considered equivalent to
the income or unitrust amount.

J. For the purposes of this section, "express total return unitrust" means a trust
that by its governing instrument requires the distribution at least annually of a
unitrust amount equal to a fixed percentage of not less than three nor more than five per
cent per year of the net fair market value of the trust's assets, valued at least
annually.