State Codes and Statutes
Statutes > North-carolina > Chapter_37A > GS_37A-4-414§ 37A‑4‑414. Derivatives and options.
(a) In this section,"derivative" means a contract or financial instrument or acombination of contracts and financial instruments that gives a trust the rightor obligation to participate in some or all changes in the price of a tangibleor intangible asset or group of assets or changes in a rate, an index of pricesor rates, or other market indicator for an asset or a group of assets.
(b) To the extent thata trustee does not account under G.S. 37A‑4‑403 for transactions inderivatives, the trustee shall allocate to principal receipts from anddisbursements made in connection with those transactions.
(c) If a trustee grantsan option to buy property from the trust, whether or not the trust owns theproperty when the option is granted, grants an option that permits anotherperson to sell property to the trust, or acquires an option to buy property forthe trust or an option to sell an asset owned by the trust, and the trustee orother owner of the asset is required to deliver the asset if the option isexercised, an amount received for granting the option shall be allocated toprincipal. An amount paid to acquire the option shall be paid from principal. Again or loss realized upon the exercise of an option, including an optiongranted to a settlor of the trust for services rendered, shall be allocated toprincipal. (2003‑232,s. 2.)
