State Codes and Statutes

Statutes > North-carolina > Chapter_37A > GS_37A-2-201

Article 2.

Decedent's Estate orTerminating Income Interest.

§ 37A‑2‑201. Determination and distribution of net income.

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

(1)        A fiduciary of anestate or of a terminating income interest shall determine the amount of netincome and net principal receipts received from property specifically given toa beneficiary under the rules in Articles 3 through 5 of this Chapter thatapply to trustees and the rules in subdivision (5) of this section. Thefiduciary shall distribute the net income and net principal receipts to thebeneficiary who is to receive the specific property.

(2)        A fiduciary shalldetermine the remaining net income of a decedent's estate or a terminatingincome interest under the rules in Articles 3 through 5 of this Chapter thatapply to trustees and by:

a.         Including in netincome all income from property used to discharge liabilities;

b.         Paying from incomeor principal, in the fiduciary's discretion, fees of attorneys, accountants,and fiduciaries; court costs and other expenses of administration; and intereston death taxes, but the fiduciary may pay those expenses from income ofproperty passing to a trust for which the fiduciary claims an estate taxmarital or charitable deduction only to the extent that the payment of thoseexpenses from income will not cause the reduction or loss of the deduction; and

c.         Paying fromprincipal all other disbursements made or incurred in connection with thesettlement of a decedent's estate or the winding up of a terminating incomeinterest, including debts, funeral expenses, disposition of remains, familyallowances, and death taxes and related penalties that are apportioned to theestate or terminating income interest by the will, the terms of the trust, orapplicable law.

(3)        Unless the will ortrust instrument otherwise provides, or the court otherwise directs, afiduciary shall distribute to a beneficiary who receives a pecuniary amountoutright interest, computed as provided in G.S. 24‑1 from the date thatis one year following the date of death of the person whose death gives rise tothe payment of the pecuniary bequest or the happening of the contingency thatcauses the income interest to end, from net income determined under subdivision(2) of this section or from principal to the extent that net income isinsufficient. However, this subdivision shall not apply to a pecuniary bequest:

a.         To or for thebenefit of a decedent's surviving spouse that is or can be qualified for thefederal estate tax marital deduction; or

b.         To or for thebenefit of charitable organizations that are qualified for the federal estatetax charitable deduction, including a charitable remainder trust.

(4)        A fiduciary shalldistribute the net income remaining after distributions required by subdivision(3) of this section in the manner described in G.S. 37A‑2‑202 toall other beneficiaries, including a beneficiary who receives a pecuniaryamount in trust, even if the beneficiary holds an unqualified power to withdrawassets from the trust or other presently exercisable general power ofappointment over the trust.

(5)        A fiduciary shallnot reduce principal or income receipts from property described in subdivision(1) of this section because of a payment described in G.S. 37A‑5‑501or G.S. 37A‑5‑502 to the extent that the will, the terms of thetrust, or applicable law requires the fiduciary to make the payment from assetsother than the property or to the extent that the fiduciary recovers or expectsto recover the payment from a third party. The net income and principalreceipts from the property are determined by including all of the amounts thefiduciary receives or pays with respect to the property, whether those amountsaccrued or became due before, on, or after the date of a decedent's death or anincome interest's terminating event, and by making a reasonable provision foramounts that the fiduciary believes the estate or terminating income interestmay become obligated to pay after the property is distributed. (2003‑232, s. 2.)

State Codes and Statutes

Statutes > North-carolina > Chapter_37A > GS_37A-2-201

Article 2.

Decedent's Estate orTerminating Income Interest.

§ 37A‑2‑201. Determination and distribution of net income.

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

(1)        A fiduciary of anestate or of a terminating income interest shall determine the amount of netincome and net principal receipts received from property specifically given toa beneficiary under the rules in Articles 3 through 5 of this Chapter thatapply to trustees and the rules in subdivision (5) of this section. Thefiduciary shall distribute the net income and net principal receipts to thebeneficiary who is to receive the specific property.

(2)        A fiduciary shalldetermine the remaining net income of a decedent's estate or a terminatingincome interest under the rules in Articles 3 through 5 of this Chapter thatapply to trustees and by:

a.         Including in netincome all income from property used to discharge liabilities;

b.         Paying from incomeor principal, in the fiduciary's discretion, fees of attorneys, accountants,and fiduciaries; court costs and other expenses of administration; and intereston death taxes, but the fiduciary may pay those expenses from income ofproperty passing to a trust for which the fiduciary claims an estate taxmarital or charitable deduction only to the extent that the payment of thoseexpenses from income will not cause the reduction or loss of the deduction; and

c.         Paying fromprincipal all other disbursements made or incurred in connection with thesettlement of a decedent's estate or the winding up of a terminating incomeinterest, including debts, funeral expenses, disposition of remains, familyallowances, and death taxes and related penalties that are apportioned to theestate or terminating income interest by the will, the terms of the trust, orapplicable law.

(3)        Unless the will ortrust instrument otherwise provides, or the court otherwise directs, afiduciary shall distribute to a beneficiary who receives a pecuniary amountoutright interest, computed as provided in G.S. 24‑1 from the date thatis one year following the date of death of the person whose death gives rise tothe payment of the pecuniary bequest or the happening of the contingency thatcauses the income interest to end, from net income determined under subdivision(2) of this section or from principal to the extent that net income isinsufficient. However, this subdivision shall not apply to a pecuniary bequest:

a.         To or for thebenefit of a decedent's surviving spouse that is or can be qualified for thefederal estate tax marital deduction; or

b.         To or for thebenefit of charitable organizations that are qualified for the federal estatetax charitable deduction, including a charitable remainder trust.

(4)        A fiduciary shalldistribute the net income remaining after distributions required by subdivision(3) of this section in the manner described in G.S. 37A‑2‑202 toall other beneficiaries, including a beneficiary who receives a pecuniaryamount in trust, even if the beneficiary holds an unqualified power to withdrawassets from the trust or other presently exercisable general power ofappointment over the trust.

(5)        A fiduciary shallnot reduce principal or income receipts from property described in subdivision(1) of this section because of a payment described in G.S. 37A‑5‑501or G.S. 37A‑5‑502 to the extent that the will, the terms of thetrust, or applicable law requires the fiduciary to make the payment from assetsother than the property or to the extent that the fiduciary recovers or expectsto recover the payment from a third party. The net income and principalreceipts from the property are determined by including all of the amounts thefiduciary receives or pays with respect to the property, whether those amountsaccrued or became due before, on, or after the date of a decedent's death or anincome interest's terminating event, and by making a reasonable provision foramounts that the fiduciary believes the estate or terminating income interestmay become obligated to pay after the property is distributed. (2003‑232, s. 2.)


State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_37A > GS_37A-2-201

Article 2.

Decedent's Estate orTerminating Income Interest.

§ 37A‑2‑201. Determination and distribution of net income.

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

(1)        A fiduciary of anestate or of a terminating income interest shall determine the amount of netincome and net principal receipts received from property specifically given toa beneficiary under the rules in Articles 3 through 5 of this Chapter thatapply to trustees and the rules in subdivision (5) of this section. Thefiduciary shall distribute the net income and net principal receipts to thebeneficiary who is to receive the specific property.

(2)        A fiduciary shalldetermine the remaining net income of a decedent's estate or a terminatingincome interest under the rules in Articles 3 through 5 of this Chapter thatapply to trustees and by:

a.         Including in netincome all income from property used to discharge liabilities;

b.         Paying from incomeor principal, in the fiduciary's discretion, fees of attorneys, accountants,and fiduciaries; court costs and other expenses of administration; and intereston death taxes, but the fiduciary may pay those expenses from income ofproperty passing to a trust for which the fiduciary claims an estate taxmarital or charitable deduction only to the extent that the payment of thoseexpenses from income will not cause the reduction or loss of the deduction; and

c.         Paying fromprincipal all other disbursements made or incurred in connection with thesettlement of a decedent's estate or the winding up of a terminating incomeinterest, including debts, funeral expenses, disposition of remains, familyallowances, and death taxes and related penalties that are apportioned to theestate or terminating income interest by the will, the terms of the trust, orapplicable law.

(3)        Unless the will ortrust instrument otherwise provides, or the court otherwise directs, afiduciary shall distribute to a beneficiary who receives a pecuniary amountoutright interest, computed as provided in G.S. 24‑1 from the date thatis one year following the date of death of the person whose death gives rise tothe payment of the pecuniary bequest or the happening of the contingency thatcauses the income interest to end, from net income determined under subdivision(2) of this section or from principal to the extent that net income isinsufficient. However, this subdivision shall not apply to a pecuniary bequest:

a.         To or for thebenefit of a decedent's surviving spouse that is or can be qualified for thefederal estate tax marital deduction; or

b.         To or for thebenefit of charitable organizations that are qualified for the federal estatetax charitable deduction, including a charitable remainder trust.

(4)        A fiduciary shalldistribute the net income remaining after distributions required by subdivision(3) of this section in the manner described in G.S. 37A‑2‑202 toall other beneficiaries, including a beneficiary who receives a pecuniaryamount in trust, even if the beneficiary holds an unqualified power to withdrawassets from the trust or other presently exercisable general power ofappointment over the trust.

(5)        A fiduciary shallnot reduce principal or income receipts from property described in subdivision(1) of this section because of a payment described in G.S. 37A‑5‑501or G.S. 37A‑5‑502 to the extent that the will, the terms of thetrust, or applicable law requires the fiduciary to make the payment from assetsother than the property or to the extent that the fiduciary recovers or expectsto recover the payment from a third party. The net income and principalreceipts from the property are determined by including all of the amounts thefiduciary receives or pays with respect to the property, whether those amountsaccrued or became due before, on, or after the date of a decedent's death or anincome interest's terminating event, and by making a reasonable provision foramounts that the fiduciary believes the estate or terminating income interestmay become obligated to pay after the property is distributed. (2003‑232, s. 2.)

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