1.In this section, "payment" means a payment that a trustee may receive over a fixed
number of years or during the life of one or more individuals because of services
rendered or property transferred to the payer in exchange for future payments. The
term includes a payment made in money or property from the payer's general assets
or from a separate fund created by the payer. For purposes of subsections 4, 5, 6, and
7, the term includes any payment from a separate fund, regardless of the reason for
the payment. In this section, "separate fund" includes a private or commercial annuity,
an individual retirement account, and a pension, profit-sharing, stock-bonus, or
stock-ownership plan.
2.To the extent that a payment is characterized as interest, a dividend, or a payment
made in lieu of i
Free access — add to your briefcase to read the full text and ask questions with AI
1. In this section, "payment" means a payment that a trustee may receive over a fixed
number of years or during the life of one or more individuals because of services
rendered or property transferred to the payer in exchange for future payments. The
term includes a payment made in money or property from the payer's general assets
or from a separate fund created by the payer. For purposes of subsections 4, 5, 6, and
7, the term includes any payment from a separate fund, regardless of the reason for
the payment. In this section, "separate fund" includes a private or commercial annuity,
an individual retirement account, and a pension, profit-sharing, stock-bonus, or
stock-ownership plan.
2. To the extent that a payment is characterized as interest, a dividend, or a payment
made in lieu of interest or a dividend, a trustee shall allocate the payment to income.
The trustee shall allocate to principal the balance of the payment and any other
payment received in the same accounting period that is not characterized as interest,
a dividend, or an equivalent payment.
3. If no part of a payment is characterized as interest, a dividend, or an equivalent
payment, and all or part of the payment is required to be made, a trustee shall allocate
to income ten percent of the part that is required to be made during the accounting
period and the balance to principal. If no part of a payment is required to be made or
the payment received is the entire amount to which the trustee is entitled, the trustee
shall allocate the entire payment to principal. For purposes of this subsection, a
payment is not required to be made to the extent that it is made because the trustee
exercises a right of withdrawal.
4. Except as otherwise provided in subsection 5, subsections 6 and 7 apply, and
subsections 2 and 3 do not apply, in determining the allocation of a payment made
from a separate fund to a trust to which an election to qualify for marital deduction
under section 2056(b)(7) of the Internal Revenue Code of 1986, as amended, has
been made or to a trust that qualified for the marital deduction under section 2056(b)
(5) of the Internal Revenue Code of 1986, as amended.
5. Subsections 4, 6, and 7 do not apply if and to the extent that the series of payments
would, without application of subsection 4, qualify for the marital deduction under
section 2056(b)(7)(C) of the Internal Revenue Code of 1986, as amended.
6. A trustee shall determine the internal income of each separate fund for the accounting
period as if the separate fund were a trust subject to this chapter. Upon request of the
surviving spouse, the trustee shall demand of the persons administering the separate
fund that this internal income be distributed to the trust. The trustee shall allocate a
payment from the separate fund to income to the extent of the internal income of the
separate fund and distribute that amount to the surviving spouse. The trustee shall
allocate the balance to principal. Upon request of the surviving spouse, the trustee
shall allocate principal to income to the extent the internal income of the separate fund
exceeds payments made from the separate fund to the trust during the accounting
period.
7. If a trustee cannot determine the internal income of a separate fund but can determine
the value of a separate fund, the internal income of the separate fund is deemed to
equal four percent of the fund's value, according to the most recent statement of value
preceding the beginning of the accounting period. If the trustee can determine neither
the internal income of the separate fund nor the fund's value, the internal income of the
fund is deemed to equal the product of the interest rate and the present value of the
expected future payments, as determined under section 7520 of the Internal Revenue
Code of 1986, as amended, for the month preceding the accounting period for which
the computation is made.
8. This section does not apply to a payment to which section 59-04.2-18 applies.