§ 15-1.2-601 — Determination and distribution of net income

Colorado § 15-1.2-601

• Jurisdiction: Colorado
• Title 15: Probate,
• Art.: Uniform Fiduciary Income and Principal Act

Text

(1) This section
applies when:

(a) The death of an individual results in the creation of an estate or trust; or

(b) An income interest in a trust terminates, whether the trust continues or is
distributed.

(2) A fiduciary of an estate or trust with an income interest that terminates
shall determine, under subsection (7) of this section and parts 4, 5, and 7 of this
article 1.2, the amount of net income and net principal receipts received from
property specifically given to a beneficiary. The fiduciary shall distribute the net
income and net principal receipts to the beneficiary that is to receive the specific
property.

(3) A fiduciary shall determine the income and net income of an estate or
income interest in a trust which terminates, other than the amount of net income
determined under subsection (2) of this section, under parts 4, 5, and 7 of this
article 1.2 and by:

(a) Including in net income all income from property used or sold to
discharge liabilities;

(b) Paying from income or principal, in the fiduciary's discretion, fees of
attorneys, accountants, and fiduciaries, court costs and other expenses of
administration, and interest on estate and inheritance taxes and other taxes
imposed because of the decedent's death, but the fiduciary may pay the expenses
from income of property passing to a trust for which the fiduciary claims a federal
estate tax marital or charitable deduction only to the extent:

(I) The payment of the expenses from income will not cause the reduction or
loss of the deduction; or

(II) The fiduciary makes an adjustment under section 15-1.2-507 (2); and

(c) Paying from principal other disbursements made or incurred in
connection with the settlement of the estate or the winding up of an income
interest that terminates, including:

(I) To the extent authorized by the decedent's will, the terms of the trust, or
applicable law, debts, funeral expenses, disposition of remains, family allowances,
estate and inheritance taxes, and other taxes imposed because of the decedent's
death; and

(II) Related penalties that are apportioned, by the decedent's will, the terms
of the trust, or applicable law, to the estate or income interest that terminates.

(4) If a decedent's will, the terms of a trust, or applicable law provides for the
payment of interest or the equivalent of interest to a beneficiary that receives a
pecuniary amount outright, the fiduciary shall make the payment from net income
determined under subsection (3) of this section or from principal to the extent net
income is insufficient.

(5) Reserved.

(6) A fiduciary shall distribute net income remaining after payments required
by subsection (4) of this section in the manner described in section 15-1.2-602 to all
other beneficiaries, including a beneficiary that receives a pecuniary amount in
trust, even if the beneficiary holds an unqualified power to withdraw assets from
the trust or other presently exercisable general power of appointment over the
trust.

(7) A fiduciary may not reduce principal or income receipts from property
described in subsection (2) of this section because of a payment described in
section 15-1.2-501 or 15-1.2-502, to the extent the decedent's will, the terms of the
trust, or applicable law requires the fiduciary to make the payment from assets
other than the property or to the extent the fiduciary recovers or expects to recover
the payment from a third party. The net income and principal receipts from the
property must be determined by including the amount the fiduciary receives or pays
regarding the property, whether the amount accrued or became due before, on, or
after the date of the decedent's death or an income interest's terminating event,
and making a reasonable provision for an amount the estate or income interest may
become obligated to pay after the property is distributed.

Legislative History

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 836, � 1, effective January 1, 2022.