(1) In this section, “undistributed income” means net income received on or before the date on which an income interest ends. The term does not include an item of income or expense which 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) Except as otherwise provided in subsection (3) of this section, when a mandatory
income interest of a beneficiary ends, the fiduciary shall pay the beneficiary's share
of the undistributed income that is not disposed of under the terms of the trust to
the beneficiary or, if the beneficiary does not survive the date the interest ends,
to the beneficiary's estate.
(3) If a beneficiary has an unqualified power to withdraw more than five percent of
the value of a trust immediately before an income interest ends:
(a) The fiduciary shall allocate to principal the undistributed income from the portion
of the trust which may be withdrawn; and
(b) Subsection (2) of this section applies only to the balance of the undistributed
(4) When a fiduciary's obligation to pay a fixed annuity or a fixed fraction of the
value of assets ends, the fiduciary shall prorate the final payment as required to
preserve an income tax, gift tax, estate tax, or other tax benefit.
FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature or via Westlaw before relying on it for your legal needs.
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