Pennsylvania § 8107 Express trusts

Pennsylvania Statutes

§ 8107 — Express trusts

Pennsylvania § 8107

Title 20DECEDENTS, ESTATES AND FIDUCIARIES

Ch. 81PRINCIPAL AND INCOME

Subch.PRELIMINARY PROVISIONS; POWER TO ADJUST;

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Bluebook

20 Pa. Cons. Stat. § 8107 (2026).

Text

(a)General rule.--In the absence of a contrary intent appearing in the governing instrument of an express unitrust, the governing instrument shall be construed in accordance with the following rules:

(1)The trustee shall follow an investment policy seeking a total return for the investments held by the trust, whether the return is to be derived from:

(i)appreciation of capital;

(ii)earnings and distributions from capital; or

(iii)both.

(2)The unitrust distribution shall be an annual distribution of an amount equal to 4% of the net fair market value of the trust's assets, whether the assets would be considered income or principal under other provisions of this chapter, averaged over the lesser of:

(i)the three preceding years; or

(ii)the period during which the trust has been

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(a) General rule.--In the absence of a contrary intent appearing in the governing instrument of an express unitrust, the governing instrument shall be construed in accordance with the following rules:

(1) The trustee shall follow an investment policy seeking a total return for the investments held by the trust, whether the return is to be derived from:

(i) appreciation of capital;

(ii) earnings and distributions from capital; or

(iii) both.

(2) The unitrust distribution shall be an annual distribution of an amount equal to 4% of the net fair market value of the trust's assets, whether the assets would be considered income or principal under other provisions of this chapter, averaged over the lesser of:

(i) the three preceding years; or

(ii) the period during which the trust has been in existence.

(3) The trustee may, in the trustee's discretion from time to time, determine all of the following:

(i) The provisions for prorating a unitrust distribution for a short year in which the beneficiary's right to payments commences or ceases.

(ii) The frequency of unitrust distributions during the year.

(iii) The effect of other payments from or contributions to the trust on the trust's valuation.

(iv) Whether to value the trust's assets annually or more frequently.

(v) What valuation dates to use.

(vi) How frequently to value nonliquid assets and whether to estimate their value.

(vii) Whether to omit from the calculations residential real estate, tangible personal property or other trust property used, occupied or possessed by a beneficiary.

(viii) Any other matters necessary for the proper functioning of the unitrust.

(4) Expenses which would be deducted from income if the trust were not a unitrust shall not be deducted from the unitrust distribution.

(5) The unitrust distribution shall be considered to have been paid from the following sources in order of priority:

(i) net income determined as if the trust were not an express unitrust;

(ii) ordinary income for Federal income tax purposes that is not allocable to net income under subparagraph (i);

(iii) net realized short-term capital gains for Federal income tax purposes;

(iv) net realized long-term capital gains for Federal income tax purposes; and

(v) the principal of the trust estate.

(b) Definition.--As used in this section, the term "express unitrust" shall mean a trust which by its governing instrument creates a trust, other than a trust solely for charitable purposes or a qualified charitable split interest trust under section 664(d) or 170(f)(2)(B) of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 664(d) or 170(f)(2)(B)), and provides for an annual distribution, the unitrust distribution, equal to a fixed percentage of the net fair market value of the trust's assets, valued at least annually, and computed with reference to such value in one or more years. If the fixed percentage is not less than 3% nor more than 5%, the unitrust distribution shall be considered the income of the trust for the purposes of this chapter.