State Codes and Statutes
Statutes > Utah > Title-22 > Chapter-03 > 22-3-40922-3-409. Receipts normally apportioned -- Deferred compensation, annuities, andsimilar payments.
(1) As used in this section:
(a) "Payment" means a payment that a trustee may receive over a fixed number of yearsor during the life of one or more individuals because of services rendered or property transferredto the payer in exchange for future payments. The term includes a payment made in money orproperty from the payer's general assets or from a separate fund created by the payer. For thepurposes of Subsections (4), (5), (6), and (7), the term also includes any payment from a separatefund, regardless of the reason for the payment.
(b) "Separate fund" includes a private or commercial annuity, an individual retirementaccount, and a pension, profit-sharing, stock-bonus, or stock-ownership plan.
(2) To the extent that a payment is characterized as interest, a dividend or a paymentmade in lieu of interest or a dividend, a trustee shall allocate the payment to income. The trusteeshall allocate to principal the balance of the payment and any other payment received in the sameaccounting period that is not characterized as interest, a dividend, or an equivalent payment.
(3) If no part of a payment is characterized as interest, a dividend, or an equivalentpayment, and all or part of the payment is required to be made, a trustee shall allocate to income10% of the part that is required to be made during the accounting period and the balance toprincipal. If no part of a payment is required to be made or the payment received is the entireamount to which the trustee is entitled, the trustee shall allocate the entire payment to principal. For purposes of this Subsection (3), a payment is not "required to be made" to the extent that it ismade because the trustee exercises a right of withdrawal.
(4) Except as otherwise provided in Subsection (5), Subsections (6) and (7) apply, andSubsections (2) and (3) do not apply, in determining the allocation of a payment made from aseparate fund to:
(a) a trust to which an election to qualify for a marital deduction under Section2056(b)(7) of the Internal Revenue Code of 1986 has been made; or
(b) a trust that qualifies for the marital deduction under Section 2056(b)(5) of the InternalRevenue Code of 1986.
(5) Subsections (4), (6), and (7) do not apply if and to the extent that the series ofpayments would, without the application of Subsection (4), qualify for the marital deductionunder Section 2056(b)(7)(C) of the Internal Revenue Code of 1986.
(6) A trustee shall determine the internal income of each separate fund for the accountingperiod as if the separate fund were a trust subject to this chapter. Upon request of the survivingspouse, the trustee shall demand of the person administering the separate fund that this internalincome be distributed to the trust. The trustee shall allocate a payment from the separate fund toincome to the extent of the internal income of the separate fund and distribute that amount to thesurviving spouse. The trustee shall allocate the balance to principal. Upon request of thesurviving spouse, the trustee shall allocate principal to income to the extent the internal incomeof the separate fund exceeds payments made from the separate fund to the trust during theaccounting period.
(7) If a trustee cannot determine the internal income of a separate fund but can determinethe value of the separate fund, the internal income of the separate fund is considered to equal 4%of the fund's value, according to the most recent statement of value preceding the beginning ofthe accounting period. If the trustee can determine neither the internal income of the separate
fund nor the fund's value, the internal income of the fund is considered to equal the product ofthe interest rate and the present value of the expected future payments, as determined underSection 7520 of the Internal Revenue Code of 1986 for the month preceding the accountingperiod for which the computation is made.
(8) This section does not apply to a payment to which Section 22-3-410 applies.
Amended by Chapter 96, 2009 General Session
