22-3-201 - Determination and distribution of net income.
22-3-201. Determination and distribution of net income.
After a decedent dies, in the case of an estate, or after an income interest in a trust ends,the following rules apply:
(1) A fiduciary of an estate or of a terminating income interest shall determine theamount of net income and net principal receipts received from property specifically given to abeneficiary under the rules in Parts 3 through 5 which apply to trustees and the rules inSubsection (5). The fiduciary shall distribute the net income and net principal receipts to thebeneficiary who is to receive the specific property.
(2) A fiduciary shall determine the remaining net income of a decedent's estate or aterminating income interest under the rules in Parts 3 through 5 which apply to trustees and by:
(a) including in net income all income from property used to discharge liabilities;
(b) paying from income or principal, in the fiduciary's discretion, fees of attorneys,accountants, and fiduciaries; court costs and other expenses of administration; and interest ondeath taxes, but the fiduciary may pay those expenses from income of property passing to a trustfor which the fiduciary claims an estate tax marital or charitable deduction only to the extent thatthe payment of those expenses from income will not cause the reduction or loss of the deduction;and
(c) paying from principal all other disbursements made or incurred in connection withthe settlement of a decedent's estate or the winding up of a terminating income interest, includingdebts, funeral expenses, disposition of remains, family allowances, and death taxes and relatedpenalties that are apportioned to the estate or terminating income interest by the will, the terms ofthe trust, or applicable law.
(3) A fiduciary shall distribute to a beneficiary who receives a pecuniary amountoutright, the interest or any other amount provided by the will, the terms of the trust, orapplicable law from net income determined under Subsection (2) or from principal to the extentthat net income is insufficient. If a beneficiary is to receive a pecuniary amount outright from atrust after an income interest ends and no interest or other amount is provided for by the terms ofthe trust or applicable law, the fiduciary shall distribute the interest or other amount to which thebeneficiary would be entitled under applicable law if the pecuniary amount were required to bepaid under a will.
(4) A fiduciary shall distribute the net income remaining after distributions required bySubsection (3) in the manner described in Section 22-3-202 to all other beneficiaries, including abeneficiary who receives a pecuniary amount in trust, even if the beneficiary holds an unqualifiedpower to withdraw assets from the trust or other presently exercisable general power ofappointment over the trust.
(5) A fiduciary may not reduce principal or income receipts from property described inSubsection (1) because of a payment described in Section 22-3-501 or 22-3-502 to the extent thatthe will, the terms of the trust, or applicable law requires the fiduciary to make the payment fromassets other than the property or to the extent that the fiduciary recovers or expects to recover thepayment from a third party. The net income and principal receipts from the property aredetermined by including all of the amounts the fiduciary receives or pays with respect to theproperty, whether those amounts accrued or became due before, on, or after the date of adecedent's death or an income interest's terminating event, and by making a reasonable provisionfor amounts that the fiduciary believes the estate or terminating income interest may becomeobligated to pay after the property is distributed.
Enacted by Chapter 285, 2004 General Session