§ 11-A-2.1 — Determination and distribution of net income

New York § 11-A-2.1

• Jurisdiction: New York
• Law EPT: Estates, Powers & Trusts
• Part 2: Decedent's Estate or Terminating Income Interest
• Art. 11-A: Uniform Principal and Income Act

Text

§ 11-A-2.1 Determination and distribution of net income\n After a decedent dies, in the case of an estate, or after an income\ninterest in a trust ends, the following rules apply:\n (1) A fiduciary of an estate or of a terminating income interest shall\ndetermine the amount of net income and net principal receipts received\nfrom property specifically given to a beneficiary under the rules in\nparts 3 through 5 which apply to trustees and the rules in paragraph\n(5). The fiduciary shall distribute the net income and net principal\nreceipts to the beneficiary who is to receive the specific property.\n (2) A fiduciary shall determine the remaining net income of a\ndecedent's estate or a terminating income interest under the rules in\nparts 3 through 5 which apply to trustees and by:\n (A) including in net income all income from property used to discharge\nliabilities;\n (B) paying from income or principal, in the fiduciary's discretion,\nfees of attorneys, accountants, and fiduciaries; court costs and other\nexpenses of administration; and interest on death taxes, but the\nfiduciary may pay those expenses from income of property passing to a\ntrust for which the fiduciary claims an estate tax marital or charitable\ndeduction only to the extent that the payment of those expenses from\nincome will not cause the reduction or loss of the deduction; and\n (C) paying from principal all other disbursements made or incurred in\nconnection with the settlement of a decedent's estate or the winding up\nof a terminating income interest, including debts, funeral expenses,\ndisposition of remains, family allowances, and death taxes and related\npenalties that are apportioned to the estate or terminating income\ninterest by the will, the terms of the trust, or applicable law.\n (3) Unless otherwise provided by the terms of the will or trust,\ncommencing (A) seven months from either the date of death or other date\na beneficiary is to receive a pecuniary amount outright if letters are\nnot required, unless the beneficiary is a genetic child, then such date\nshall be the later of the aforementioned time periods in this\nsubparagraph or the date of birth of the genetic child entitled to\ninherit from the child's genetic parent under section 4-1.3 of this\nchapter, or (B) seven months from the time letters, including\npreliminary or temporary letters, are granted if letters are required,\nunless the beneficiary is a genetic child, then such date shall be the\nlater of the aforementioned time period in this subparagraph or the date\nof birth of the genetic child entitled to inherit from the child's\ngenetic parent under section 4-1.3 of this chapter, a fiduciary shall\ndistribute income to a beneficiary who receives a pecuniary amount\noutright, from net income determined under paragraph (2) or from\nprincipal to the extent that net income is insufficient, of an amount\nequal to the pecuniary amount multiplied by an income factor, which\nshall be set (or reset) on the first business day of each calendar year\nand fixed for that calendar year at the target Federal funds rate as\nannounced by the Federal Reserve Board (or in the event the target\nFederal funds rate is a range of rates, the high of that range) less one\npercent, but in no event less than one-half of one percent.\n (4) A fiduciary shall distribute the net income remaining after\ndistributions required by paragraph (3) in the manner described in\n11-A-2.2 to all other beneficiaries, including a beneficiary who\nreceives a pecuniary amount in trust, even if the beneficiary holds an\nunqualified power to withdraw assets from the trust or other presently\nexercisable general power of appointment over the trust.\n (5) A fiduciary may not reduce principal or income receipts from\nproperty described in paragraph (1) because of a payment described in\n11-A-5.1 or 11-A-5.2 to the extent that the will, the terms of the\ntrust, or applicable law requires the fiduciary to make the payment from\nassets other than the property or to the extent that the fiduciary\nrecovers or expects to recover the payment from a third party. The net\nincome and principal receipts from the property are determined by\nincluding all of the amounts the fiduciary receives or pays with respect\nto the property, whether those amounts accrued or became due before, on,\nor after the date of a decedent's death or an income interest's\nterminating event, and by making a reasonable provision for amounts that\nthe fiduciary believes the estate or terminating income interest may\nbecome obligated to pay after the property is distributed.\n