14-7409. Apportionment when income interest
ends; definition
A. When a mandatory income interest ends, the trustee shall pay to a mandatory
income beneficiary who survives that date, or the estate of a deceased mandatory income
beneficiary whose death causes the interest to end, the beneficiary's share of the
undistributed income that is not disposed of under the terms of the trust unless the
beneficiary has an unqualified power to revoke more than five per cent of the trust
immediately before the income interest ends. In the latter case, the undistributed income
from the portion of the trust that may be revoked must be added to principal.
B. When a trustee's obligation to pay a fixed annuity or a fixed fraction of the
value of the trust's assets ends, the trustee shall prorate the final payment to the
extent required by applicable law to accomplish a purpose of the trust or its settlor
relating to income, gift, estate or other tax requirements.
C. For the purposes of this section, "undistributed income" means net income
received before the date on which an income interest ends and does not include an item of
income or expense that is due or accrued or net income that has been added or is required
to be added to principal under the terms of the trust.
|