§ 30-2-14-36 — Transactions in derivatives; granting, acquiring, or exercising an option

(a) As used in this section, "derivative"
means a contract or financial instrument or a combination of contracts
and financial instruments that gives a trust the right or obligation to
participate in:
(1) some or all changes in the price of a tangible or intangible
asset or group of assets; or
(2) changes in a rate, an index of prices or rates, or other market
indicator for an asset or a group of assets.
(b) To the extent that a trustee does not account under section 25 of
this chapter for transactions in derivatives, the trustee shall allocate to
principal receipts from and disbursements made in connection with
those transactions.
(c) If a trustee:
(1) grants an option to buy property from the trust, whether or not
the trust owns the property when the option is granted;
(2) grants an option that permits another person to sell property to
the trust; or
(3) acquires an option to buy property for the trust or an option to
sell an asset owned by the trust;
and the trustee or other owner of the asset is required to deliver the
asset if the option is exercised, an amount received for granting the
option must be allocated to principal. An amount paid to acquire the
option must be paid from principal. A gain or loss realized upon the
exercise of an option, including an option granted to a settlor of the
trust for services rendered, must be allocated to principal.

Legislative History

As added by P.L.84-2002, SEC.2.