1. In this section, “undistributed income” means net income received before the date on which an income interest ends. The term 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.
2. 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 percent 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.
3. 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 if and 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.
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