ORS Chapter 129

Chapter 129 — UniformPrincipal and Income Act

2009 EDITION

UNIFORMPRINCIPAL AND INCOME ACT

PROTECTIVEPROCEEDINGS; POWERS OF ATTORNEY; TRUSTS

DEFINITIONSAND FIDUCIARY DUTIES

129.200 Shorttitle

129.205 Definitions

129.210 Fiduciaryduties; general principles

129.215 Trustee’spower to adjust

129.220 Judicialcontrol of discretionary power

129.225 Conversionto unitrust

DECEDENT’SESTATE OR TERMINATING INCOME INTEREST

129.250 Determinationand distribution of net income

129.255 Distributionto residuary and remainder beneficiaries

APPORTIONMENTAT BEGINNING AND END OF INCOME INTEREST

129.270 Whenright to income begins and ends

129.275 Apportionmentof receipts and disbursements when decedent dies or income interest begins

129.280 Apportionmentwhen income interest ends

ALLOCATIONOF RECEIPTS DURING ADMINISTRATION OF TRUST

(ReceiptsFrom Entities)

129.300 Characterof receipts

129.305 Distributionfrom trust or estate

129.308 Businessand other activities conducted by trustee

(ReceiptsNot Normally Apportioned)

129.310 Principalreceipts

129.315 Rentalproperty

129.320 Obligationto pay money

129.325 Insurancepolicies and similar contracts

(ReceiptsNormally Apportioned)

129.350 Insubstantialallocations not required

129.355 Deferredcompensation, annuities and similar payments

129.360 Liquidatingasset

129.365 Minerals,water and other natural resources

129.370 Timber

129.375 Propertynot productive of income

129.380 Derivativesand options

129.385 Asset-backedsecurities

ALLOCATIONOF DISBURSEMENTS DURING ADMINISTRATION OF TRUST

129.400 Disbursementsfrom income

129.405 Disbursementsfrom principal

129.410 Transfersfrom income to principal for depreciation

129.415 Transfersfrom income to reimburse principal

129.420 Incometaxes

129.425 Adjustmentsbetween principal and income because of taxes

UNIFORMITYOF APPLICATION

129.450 Uniformityof application and construction

129.005 [1975 c.717 §12(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); repealed by2003 c.279 §36]

129.010 [Repealed by1975 c.717 §1]

129.015 [1975 c.717 §11(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); repealed by2003 c.279 §36]

129.020 [Repealed by1975 c.717 §1]

129.025 [1975 c.717 §2(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); 2003 c.14 §47;repealed by 2003 c.279 §36]

129.030 [Repealed by1975 c.717 §1]

129.035 [1975 c.717 §4(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); 2003 c.14 §48;repealed by 2003 c.279 §36]

129.040 [Repealed by1975 c.717 §1]

129.045 [1975 c.717 §3(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); 2001 c.104 §41;2003 c.14 §49; repealed by 2003 c.279 §36]

129.050 [Amended by1963 c.437 §1; 1973 c.272 §1; repealed by 1975 c.717 §1]

129.055 [1975 c.717 §5(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); repealed by2003 c.279 §36]

129.060 [Repealed by1975 c.717 §1]

129.065 [1975 c.717 §6(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); repealed by2003 c.279 §36]

129.070 [Repealed by1975 c.717 §1]

129.075 [1975 c.717 §7(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); 1991 c.620 §1;repealed by 2003 c.279 §36]

129.080 [Repealed by1975 c.717 §1]

129.085 [1975 c.717 §8(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); repealed by2003 c.279 §36]

129.090 [Amended by1975 c.717 §16; repealed by 2003 c.279 §36]

129.100 [Amended by1975 c.717 §17; repealed by 2003 c.279 §36]

129.105 [1975 c.717 §9(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); repealed by2003 c.279 §36]

129.110 [Repealed by1975 c.717 §1]

129.115 [1975 c.717 §10(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); 2003 c.14 §50;repealed by 2003 c.279 §36]

129.120 [Repealed by1975 c.717 §1]

129.125 [1975 c.717 §13(enacted in lieu of 129.010 to 129.080 and 129.110 to 129.140); repealed by2003 c.279 §36]

129.130 [Repealed by1975 c.717 §1]

129.140 [Repealed by1975 c.717 §1]

DEFINITIONSAND FIDUCIARY DUTIES

129.200Short title.This chapter may be cited as the Uniform Principal and Income Act. [2003 c.279 §1]

Note: Section 34,chapter 279, Oregon Laws 2003, provides:

Sec.34.Except as may be expressly provided in a will or in the terms of a trust or insections 1 to 31 of this 2003 Act [ORS chapter 129], sections 1 to 31 of this2003 Act apply to the administration of all trusts and estates, whether cominginto existence before, on or after the effective date of this 2003 Act [January1, 2004]. [2003 c.279 §34]

129.205Definitions.In this chapter:

(1)“Accounting period” means a calendar year unless another 12-month period isselected by a fiduciary. The term includes a portion of a calendar year orother 12-month period that begins when an income interest begins or ends whenan income interest ends.

(2)“Beneficiary” includes, in the case of a decedent’s estate, an heir and deviseeand, in the case of a trust, an income beneficiary and a remainder beneficiary.

(3)“Fiduciary” means a personal representative or a trustee. The term includes anexecutor, administrator, successor personal representative, specialadministrator and a person performing substantially the same function.

(4)“Income” means money or property that a fiduciary receives as current returnfrom a principal asset. The term includes a portion of receipts from a sale,exchange or liquidation of a principal asset, to the extent provided in ORS129.300 to 129.385.

(5)“Income beneficiary” means a person to whom net income of a trust is or may bepayable.

(6)“Income interest” means the right of an income beneficiary to receive all orpart of net income, whether the terms of the trust require it to be distributedor authorize it to be distributed in the trustee’s discretion.

(7)“Mandatory income interest” means the right of an income beneficiary to receivenet income that the terms of the trust require the fiduciary to distribute.

(8)“Net income” means the total receipts allocated to income during an accountingperiod minus the disbursements made from income during the period, plus orminus transfers under this chapter to or from income during the period.

(9)“Person” means an individual, corporation, business trust, estate, trust,partnership, limited liability company, association, joint venture, government,governmental subdivision, agency or instrumentality, public corporation or anyother legal or commercial entity.

(10)“Principal” means property held in trust for distribution to a remainderbeneficiary when the trust terminates.

(11)“Remainder beneficiary” means a person entitled to receive principal when anincome interest ends.

(12)“Terms of a trust” means the manifestation of the intent of a settlor ordecedent with respect to the trust, expressed in a manner that admits of itsproof in a judicial proceeding, whether by written or spoken words or byconduct.

(13)“Trustee” includes an original, additional or successor trustee, whether or notappointed or confirmed by a court. [2003 c.279 §2]

129.210Fiduciary duties; general principles. (1) In allocating receipts anddisbursements to or between principal and income, and with respect to anymatter within the scope of ORS 129.250 to 129.280, a fiduciary:

(a)Shall administer a trust or estate in accordance with the terms of the trust orthe will, even if there is a different provision in this chapter;

(b)May administer a trust or estate by the exercise of a discretionary power ofadministration given to the fiduciary by the terms of the trust or the will,even if the exercise of the power produces a result different from a resultrequired or permitted by this chapter;

(c)Shall administer a trust or estate in accordance with this chapter if the termsof the trust or the will do not contain a different provision or do not givethe fiduciary a discretionary power of administration; and

(d)Shall add a receipt or charge a disbursement to principal to the extent thatthe terms of the trust and this chapter do not provide a rule for allocatingthe receipt or disbursement to or between principal and income.

(2)In exercising the power to adjust under ORS 129.215 (1), or a discretionarypower of administration regarding a matter within the scope of this chapter,whether granted by the terms of a trust, a will or by this chapter, a fiduciaryshall administer a trust or estate impartially, based on what is fair andreasonable to all of the beneficiaries, except to the extent that the terms ofthe trust or the will clearly manifest an intention that the fiduciary shall ormay favor one or more of the beneficiaries. A determination in accordance withthis chapter is presumed to be fair and reasonable to all of the beneficiaries.[2003 c.279 §3]

129.215Trustee’s power to adjust. (1) A trustee may adjust between principal andincome to the extent the trustee considers necessary if the trustee invests andmanages trust assets as a prudent investor, the terms of the trust describe theamount that may or must be distributed to a beneficiary by referring to thetrust’s income and the trustee determines, after applying the rules in ORS129.210 (1), that the trustee is unable to comply with ORS 129.210 (2).

(2)In deciding whether and to what extent to exercise the power conferred bysubsection (1) of this section, a trustee shall consider all factors relevantto the trust and its beneficiaries, including the following factors to theextent they are relevant:

(a)The nature, purpose and expected duration of the trust;

(b)The intent of the settlor;

(c)The identity and circumstances of the beneficiaries;

(d)The needs for liquidity, regularity of income and preservation and appreciationof capital;

(e)The assets held in the trust, the extent to which they consist of financialassets, interests in closely held enterprises, tangible and intangible personalproperty or real property, the extent to which an asset is used by abeneficiary and whether an asset was purchased by the trustee or received fromthe settlor;

(f)The net amount allocated to income under the other sections of this chapter andthe increase or decrease in the value of the principal assets, which thetrustee may estimate as to assets for which market values are not readilyavailable;

(g)Whether and to what extent the terms of the trust give the trustee the power toinvade principal or accumulate income or prohibit the trustee from invadingprincipal or accumulating income, and the extent to which the trustee hasexercised a power from time to time to invade principal or accumulate income;

(h)The actual and anticipated effect of economic conditions on principal andincome and effects of inflation and deflation; and

(i)The anticipated tax consequences of an adjustment.

(3)A trustee may not make an adjustment:

(a)That diminishes the income interest in a trust that requires all of the incometo be paid at least annually to a spouse and for which an estate tax or gifttax marital deduction would be allowed, in whole or in part, if the trustee didnot have the power to make the adjustment;

(b)That reduces the actuarial value of the income interest in a trust to which aperson transfers property with the intent to qualify for a gift tax exclusion;

(c)That changes the amount payable to a beneficiary as a fixed annuity or a fixedfraction of the value of the trust assets;

(d)From any amount that is permanently set aside for charitable purposes under awill or the terms of a trust unless both income and principal are so set aside;

(e)If possessing or exercising the power to make an adjustment causes anindividual to be treated as the owner of all or part of the trust for incometax purposes and the individual would not be treated as the owner if thetrustee did not possess the power to make an adjustment;

(f)If possessing or exercising the power to make an adjustment causes all or partof the trust assets to be included for estate tax purposes in the estate of anindividual who has the power to remove a trustee or appoint a trustee, or both,and the assets would not be included in the estate of the individual if thetrustee did not possess the power to make an adjustment;

(g)If the trustee is a beneficiary of the trust; or

(h)If the power to make adjustments has been released upon conversion of the trustto a unitrust under ORS 129.225.

(4)If subsection (3)(e), (f), (g) or (h) of this section applies to a trustee andthere is more than one trustee, a cotrustee to whom the provision does notapply may make the adjustment unless the exercise of the power by the remainingtrustee or