§ 30-2-14-18 — Distributions to beneficiaries; payment of fees and costs

Indiana § 30-2-14-18

• Jurisdiction: Indiana
• Art. 2: GENERAL PROVISIONS
• Ch. 14: Uniform Principal and Income Act

Text

(a) After an income interest in a trust ends,
the following rules apply:
(1) A fiduciary of a terminating income interest shall determine
the amount of net income and net principal receipts received from
property specifically given to a beneficiary under the rules in
sections 20 through 43 of this chapter that apply to trustees and
the rules in subdivision (5). The fiduciary shall distribute the net
income and net principal receipts to the beneficiary who is to
receive the specific property.
(2) A fiduciary shall determine the remaining net income of a
terminating income interest under the rules in sections 20 through
43 of this chapter that apply to trustees and by:
(A) including in net income all income from property used to
discharge liabilities;
(B) paying from income or principal, in the fiduciary's
discretion:
(i) fees of attorneys, accountants, and fiduciaries;
(ii) court costs and other expenses of administration; and
(iii) interest on death taxes;
but the fiduciary may pay those expenses from income of
property passing to a trust for which the fiduciary claims an
estate tax marital or charitable deduction only to the extent that
the payment of those expenses from income will not cause the
reduction or loss of the deduction; and
(C) paying from principal all other disbursements made or
incurred in connection with the winding up of a terminating
income interest, including debts; funeral expenses; disposition
of remains; family allowances; and death taxes and related
penalties that are apportioned to the terminating income interest
by the terms of the trust or applicable law.
(3) If a beneficiary is to receive a pecuniary amount outright from
a trust after an income interest ends and no interest or other
amount is provided for by the terms of the trust or applicable law,
the fiduciary shall distribute the interest or other amount to which
the beneficiary would be entitled under applicable law if the
pecuniary amount were required to be paid under a will.
(4) A fiduciary shall distribute the net income remaining after
distributions required by subdivision (3) in the manner described
in section 19 of this chapter to all residuary beneficiaries, 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.
(5) A fiduciary may not reduce principal or income receipts from
property described in subdivision (1) because of a payment
described in section 38 or 39 of this chapter to the extent that 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
that the fiduciary recovers or expects to recover the payment from
a third party. The net income and principal receipts from the
property are determined by:
(A) including all of the amounts the fiduciary receives or pays
with respect to the property, whether those amounts accrued or
became due before, on, or after the date of an income interest's
terminating event; and
(B) making a reasonable provision for amounts that the
fiduciary believes the terminating income interest may become
obligated to pay after the property is distributed.
(b) For purposes of this section, the interest of a settlor in a
revocable living trust ends and becomes a terminating income interest
when the settlor dies. Property that:
(1) becomes part of the trust by reason of the settlor's death; or
(2) is distributed to the trust from the settlor's estate;
becomes part of the terminating income interest when the property is
received by the trust.
(c) For purposes of this section, a decedent's estate is not a
terminating income interest.

Legislative History

As added by P.L.84-2002, SEC.2. Amended by P.L.61-2006, SEC.6; P.L.51-2014, SEC.13.