§ 59-04.2-19 — (411) Minerals, water, and other natural resources

North Dakota § 59-04.2-19

• Jurisdiction: North Dakota
• Title 59: Trusts, Uses, and Powers
• Ch. 59-04.2: Uniform Principal and Income Act (1997)

Text

1. To the extent that a trustee accounts for receipts from an interest in minerals or other
natural resources pursuant to this section, the trustee shall allocate them as follows:
a. If received as nominal delay rental or nominal annual rent on a lease, a receipt
must be allocated to income.
b. If received from a production payment, a receipt must be allocated to income if
and to the extent that the agreement creating the production payment provides a
factor for interest or its equivalent. The balance must be allocated to principal.
c. If an amount received as a royalty, shut-in-well payment, take-or-pay payment,
bonus, or delay rental is more than nominal, fifteen percent must be allocated to
principal and the balance to income.
d. If an amount is received from a working interest or any other interest not provided
for in subdivision a, b, or c, fifteen percent of the net amount received must be
allocated to principal and the balance to income.
2. An amount received on account of an interest in water that is renewable must be
allocated to income. If the water is not renewable, ninety percent of the amount must
be allocated to principal and the balance to income.
3. This chapter applies whether or not a decedent or donor was extracting minerals,
water, or other natural resources before the interest became subject to the trust.
4. If a trust has not received receipts from an interest in minerals, water, or other natural
resources before August 1, 2015, the trustee shall allocate receipts from interests in
minerals, water, or other natural resources as provided in this section.
5. If a trust has received receipts from an interest in minerals, water, or other natural
resources before August 1, 2015, the trustee shall allocate receipts from interests in
minerals, water, or other natural resources as follows:
a. If the trust acquired an interest in minerals, water, or other natural resources
before August 1, 1999, the trustee may allocate receipts in the manner used by
the trustee before August 1, 1999, or as required by law in effect on August 1,
1999.
b. If the trust acquired an interest in minerals, water, or other natural resources after
August 1, 1999, and before August 1, 2015, the trustee shall allocate receipts in
the manner required by law in effect on August 1, 1999.
6. The trustee may petition the court to permanently modify the manner used to allocate
receipts under this section. In deciding whether and to what extent to modify the
manner used to allocate receipts, the court may consider any factors relevant to the
trust and its beneficiaries; including the following factors to the extent they are
relevant:
a. The nature, purpose, and expected duration of the trust;
b. The intent of the settlor;
c. The identity and circumstances of the beneficiaries;
d. The need for liquidity, regularity of income, and preservation and appreciation of
capital;
e. The assets held in the trust; the extent to which they consist of financial assets,
interests in closely held enterprises, tangible and intangible personal property, or
real property; the extent to which an asset is used by a beneficiary; and whether
an asset was purchased by the trustee or received from the settlor;
f. The net amount allocated to income under the other sections of this chapter and
the increase or decrease in the value of the principal assets;
g. Whether and to what extent the terms of the trust give the trustee the power to
invade principal or accumulate income or prohibit the trustee from invading

principal or accumulating income, and the extent to which the trustee has
exercised a power from time to time to invade principal or accumulate income;
h. The actual and anticipated effect of economic conditions on principal and income
and effects of inflation and deflation; and
i. The anticipated tax consequences of a modification.