14-7405

14-7405. Determination and distribution of net
income

After a decedent dies, in the case of an estate, or after an income interest in a
trust ends, the following apply:

1. A fiduciary of an estate or of a terminating income interest shall determine the
amount of net income and net principal receipts received from property specifically given
to a beneficiary pursuant to the provisions of sections 14-7407 through 14-7430 that
apply to trustees and paragraph 5 of this section. The fiduciary shall distribute the net
income and net principal receipts to the beneficiary who is to receive the specific
property.

2. A fiduciary shall determine the remaining net income of a decedent's estate or a
terminating income interest pursuant to the provisions of section 14-7407 through 14-7430
that apply to trustees and by:

(a) Including in net income all income from property used to discharge liabilities.

(b) Paying from income or principal, in the fiduciary's discretion, fees of
attorneys, accountants and fiduciaries, court costs and other expenses of administration
and interest on death taxes, but the fiduciary may pay those expenses from income of
property passing to a trust for which the fiduciary claims an estate tax marital or
charitable deduction only to the extent that the payment of those expenses from income
will not cause the reduction or loss of the deduction.

(c) Paying from principal all other disbursements made or incurred in connection
with the settlement of a decedent's estate or the winding up of a terminating income
interest, including debts, funeral expenses, disposition of remains, family allowances
and death taxes and related penalties that are apportioned to the estate or terminating
income interest by the will, the terms of the trust or applicable law.

3. A fiduciary shall distribute to a beneficiary who receives a pecuniary amount
outright the interest or any other amount provided by the will, the terms of the trust or
applicable law from net income determined under paragraph 2 of this section or from
principal to the extent that net income is insufficient. If a beneficiary is to receive
a pecuniary amount outright from a trust after an income interest ends and no interest or
other amount is provided for by the terms of the trust or applicable law, the fiduciary
shall distribute the interest or other amount to which the beneficiary would be entitled
under applicable law if the pecuniary amount were required to be paid under a will.

4. A fiduciary shall distribute the net income remaining after distributions
required by paragraph 3 of this section in the manner described in section 14-7406 to all
other beneficiaries, including a beneficiary who receives a pecuniary amount in trust,
even if the beneficiary holds an unqualified power to withdraw assets from the trust or
other presently exercisable general power of appointment over the trust.

5. A fiduciary may not reduce principal or income receipts from property described
in paragraph 1 of this section because of a payment described in section 14-7425 or
14-7426 to the extent that the will, the terms of the trust or applicable law requires
the fiduciary to make the payment from assets other than the property or to the extent
that the fiduciary recovers or expects to recover the payment from a third party. The net
income and principal receipts from the property are determined by including all of the
amounts the fiduciary receives or pays with respect to the property, whether those
amounts accrued or became due before, on or after the date of a decedent's death or an
income interest's terminating event, and by making a reasonable provision for amounts
that the fiduciary believes the estate or terminating income interest may become
obligated to pay after the property is distributed.