§ 2-3-819 — Deferred compensation, annuities and similar payments

(a) As used in this section:
(i) "Payment" means a payment that a trustee may
receive over a fixed number of years or during the life of one
(1) 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 the purposes of subsections (d) through (g) of this
section, the term also includes any payment from any separate
fund, regardless of the reason for the payment;
(ii) "Separate fund" includes a private or commercial
annuity, an individual retirement account, and a pension,
profit-sharing, stock-bonus or stock-ownership plan.
(b) To the extent that a payment is characterized by the
separate fund as interest, a dividend or a payment made in lieu
of interest or a dividend, a trustee shall allocate it 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.
(c) If no part of a payment is characterized by the
separate fund 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 (10%) 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.
(d) Except as otherwise provided in subsection (e) of this
section, subsections (f) and (g) of this section shall apply,
and subsection (b) and (c) of this section shall not apply in
determining the allocation of a payment made from a separate
fund to:
(i) A trust to which an election to qualify for a
marital deduction under section 2056(b)(7) of the Internal
Revenue Code has been made;
(ii) A trust that qualifies for the marital deduction
under section 2056(b)(5) of the Internal Revenue Code; or
(iii) A trust which requires payment of all trust
income to the trust beneficiaries during the accounting period.
(e) Paragraph (d)(i) and subsections (f) and (g) of this
section shall not apply if, and to the extent that, the series
of payments would, without the application of paragraph (d)(i)
of this section, qualify for the marital deduction under section
2056(b)(7)(C) of the Internal Revenue Code.
(f) A trustee shall determine the internal income of each
separate fund for the accounting period as if the separate fund
were a separate trust fund subject to this act. Upon request of
the surviving spouse or other trust beneficiaries with the right
to all the trust income, the trustee shall demand that the
person administering the separate fund distribute the internal
income 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 or for the
benefit of the surviving spouse or other trust beneficiaries
with the right to all the trust income. The trustee shall
allocate the balance of the payment to the principal. Upon
request of the surviving spouse or other trust beneficiaries
with the right to all the trust income, 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.
(g) If a trustee cannot determine the internal income of a
separate fund but can determine the value of the separate fund,
the internal income of the separate fund is deemed to equal
three percent (3%) 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 for the month preceding the accounting period for
which the computation is made.
(h) This section does not apply to payments to which W.S.
2-3-820 applies.