The following definitions apply for purposes of this chapter:
(a)
“Accounting period” means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.
(b)
“Asset-backed security” means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing
or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section 16340, 16348, or 16353 applies.
(c)
“Beneficiary” includes the following:
(1)
For a trust:
(A)
A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.
(B)
A remainder beneficiary.
(C)
Any other successor beneficiary.
(2)
For an estate, an heir, legatee, and devisee.
(3)
For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other
interest following a life estate or term interest.
(d)
“Court” means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in subdivision (b) of Section 16322.
(e)
“Current income beneficiary” means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.
(f)
“Distribution” means a payment or transfer by a fiduciary to a beneficiary in the beneficiary’s capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiary’s right to receive the payment or transfer under the terms of the trust. “Distribute,” “distributed,” and “distributee” have corresponding meanings.
(g)
“Estate” means a decedent’s estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.
(h)
“Fiduciary” includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. “Fiduciary” includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.
(i)
“Income” means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the
extent provided in Article 4 (commencing with Section 16340).
(j)
“Income interest” means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciary’s discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.
(k)
“Independent person” means a person that is not:
(1)
For a trust, any of the following:
(A)
A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees
of trust income or principal were terminated, assuming no power of appointment is exercised.
(B)
A settlor of the trust.
(C)
An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.
(2)
For an estate, a beneficiary.
(3)
A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).
(4)
A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.
(5)
An employee of a person described in paragraphs (1) to (4), inclusive.
(
l
)
“Mandatory income interest” means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.
(m)
“Net income” means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section 16330), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section 16327. The term does not include an adjustment from income to principal under Section 16327.
(n)
“Person” means an individual, estate, trust, business or nonprofit
entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.
(o)
“Personal representative” means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the person’s status.
(p)
“Principal” means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.
(q)
“Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(r)
“Settlor” means a person, including a testator, that creates or contributes property to a
trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that person’s contribution, except to the extent another person has the power to revoke or withdraw that portion.
(s)
“Special tax benefit” means any of the following:
(1)
Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.
(2)
Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in
Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 1361(a)(1), as amended).
(3)
An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlor’s spouse to receive the net income of the trust.
(4)
Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:
(A)
A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986,
as amended (26 U.S.C. Sec. 2612(b), as amended), could be made from the trust.
(B)
A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Sec. 2612(a), as amended), could occur with respect to the trust.
(C)
An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:
(i)
A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2612(b), as amended), could be made from the trust.
(ii)
A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986,
as amended (26 U.S.C. Sec. 2612(a), as amended), could occur with respect to the trust.
(t)
“Successive interest” means the interest of a successor beneficiary.
(u)
“Successor beneficiary” means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.
(v)
“Terms of a trust” means any of the following:
(1)
(A)
For a trust, the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlor’s death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor.
(B)
“Terms of a trust” includes, but is not
limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust.
(C)
“Terms of a trust” does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, “terms of a trust” does not include trust instruments or amendments that are superseded by the last restatement before the settlor’s death, but it does include amendments executed after the restatement. “Terms of a trust” also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.
(2)
For an estate, a will.
(3)
For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.
(w)
(1)
“Trust” includes both of the following:
(A)
An express trust, private or charitable, with additions to the trust, wherever and however created.
(B)
A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.
(2)
“Trust” does not include any of the following:
(A)
A constructive trust.
(B)
A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest,
salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.
(C)
An arrangement under which a person is a nominee, escrowee, or agent for another.
(x)
“Trustee” means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.
(y)
“Will” means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individual’s property, effective at the individual’s death. “Will” includes a codicil or other amendment to a testamentary instrument.