§ 564-C:1-107 — Creation of Total Return Unitrust

(a) The following provisions shall apply to a trust that, by its governing instrument, or by conversion pursuant to RSA 564-C:1-106, requires or permits the distribution, at least annually, of a unitrust amount equal to a fixed percentage of not less than 3 nor more than 5 percent per year of the fair market value of the trust's assets, valued at least annually, such trust to be referred to in this section as a "total return unitrust."
(b) The unitrust amount for a total return unitrust may be determined by reference to the fair market value of the trust's assets in one year or more than one year.
(c) Distribution of such a fixed percentage unitrust amount is considered a distribution of all the income of the total return unitrust.
(d) A total return unitrust may or may not provide a mechanism for changing the unitrust percentage similar to the mechanism provided under RSA 564-C:1-106, based upon the factors noted therein, and may or may not provide for a conversion from a unitrust to an income trust and/or a reconversion of an income trust to a unitrust similar to the mechanism under RSA 564-C:1-106.
(e) If a total return unitrust does not specifically or by reference to RSA 564-C:1-106 deny a power to change the unitrust percentage or to convert to an income trust, then the trustee shall have such power and the total return unitrust shall be deemed to be a "unitrust" within the meaning of RSA 564-C:1-106 for purposes of applying RSA 564-C:1-106 to the trust.
(f) The distribution of a fixed percentage of not less than 3 percent nor more than 5 percent reasonably apportions the total return of a total return unitrust.
(g) The trust instrument may grant discretion to the trustee to adopt a consistent practice of treating capital gains as part of the unitrust distribution, to the extent that the unitrust distribution exceeds the net accounting income, or it may specify the ordering of such classes of income.
(h) Unless the terms of the trust specifically provide otherwise, the trustee:
(1) Shall consider the unitrust amount as paid from net income determined as if the trust were not a unitrust; and
(2) To the extent net income is insufficient, then after calculating the trust's capital gain net income as described in Internal Revenue Code ("I.R.C.") section 1222(9) (26 U.S.C. section 1222(9)), shall consider the unitrust amount as paid from net realized short-term capital gain as described in I.R.C. section 1222(5) (26 U.S.C. section 1222(5)) and then from net realized long-term capital gain described in I.R.C. section 1222(7) (26 U.S.C. section 1222(7)); and
(3) Shall then consider the unitrust amount as paid from the principal of the trust.
(i) The trust instrument may provide that:
(1) Assets for which a fair market value cannot be readily ascertained shall be valued using such valuation methods as are deemed reasonable and appropriate;
(2) Assets used by a trust beneficiary, such as a residence property or tangible personal property, may be excluded from the net fair market value for computing the unitrust amount; and
(3) A trustee has discretion under RSA 564-C:1-106(e) after the conversion of a trust to a unitrust.

Legislative History

2024, 292:5, eff. Sept. 24, 2024.