(a) This section applies to a trust that, by its governing instrument, requires the distribution, at least annually, of a unitrust amount.
(b) The trustee of an express total return unitrust may determine the unitrust amount by reference to the net fair market value of the unitrust's assets in one or more years.
(c) Distribution of a unitrust amount is considered a distribution of all of the income of an express total return unitrust and is considered to be an income interest.
(d) Distribution of a unitrust amount is considered to be a reasonable apportionment of the total return of an express total return unitrust.
(e) An express total return unitrust that provides for a distribution based on a unitrust percentage in excess of five percent of the net fair market value of the unitrust assets a year is considered a distribution of all of the income of the unitrust and a distribution of principal of the unitrust to the extent that the distribution exceeds five percent a year.
(f) The governing instrument of an express total return unitrust may grant discretion to the trustee to adopt a consistent practice of treating capital gains as part of the unitrust amount to the extent that the unitrust amount exceeds the income determined as if the trust were not an express total return unitrust, or the governing instrument may specify the ordering of classes of income.
(g) Unless the terms of the express total return unitrust specifically provide otherwise, a unitrust amount is considered a distribution made from the following sources, which are listed in order of priority:
(1) net income determined as if the trust were not a unitrust;
(2) ordinary income not allocable to net income;
(3) net realized short-term capital gains;
(4) net realized long-term capital gains; and
(5) the principal of the trust estate.
(h) The governing instrument of an express total return unitrust may provide that the trustee may exclude assets used by the unitrust's beneficiary, including a residence property or tangible personal property, from the net fair market value of the unitrust's assets for the purposes of computing the unitrust amount. These assets may be considered equivalent to income or to the unitrust amount.
(i) In this section,
(1) "express total return unitrust" means a trust that, by its governing instrument, requires the distribution, at least annually, of a unitrust amount;
(2) "unitrust amount" means an amount equal to a fixed percentage of not less than three nor more than five percent each year of the net fair market value of the annual value of the trust's assets distributed from an express total return unitrust to a beneficiary.
Section: Previous 13.38.310 13.38.320 13.38.330 13.38.340 13.38.350 13.38.360 13.38.370 13.38.380 13.38.390 13.38.400 13.38.410 13.38.420 13.38.430 13.38.435 NextLast modified: November 15, 2016