Termination of mandatory income interest
Sec. 22. (a) As used in this section, "undistributed income" means
net income received before the date on which an income interest
ends. The term does not include an item of income or expense that is
due or accrued or net income that has been added or is required to be
added to principal under the terms of the trust.
(b) When a mandatory income interest ends, the trustee shall pay
to a mandatory income beneficiary who survives that date, or the
estate of a deceased mandatory income beneficiary whose death
causes the interest to end, the beneficiary's share of the undistributed
income that is not disposed of under the terms of the trust unless the
beneficiary has an unqualified power to revoke more than five
percent (5%) of the trust immediately before the income interest
ends. In the latter case, the undistributed income from the portion of
the trust that may be revoked must be added to principal.
(c) When a trustee's obligation to pay a fixed annuity or a fixed
fraction of the value of the trust's assets ends, the trustee shall prorate
the final payment if and to the extent required by applicable law to
accomplish a purpose of the trust or its settlor relating to income,
gift, estate, or other tax requirements.
As added by P.L.84-2002, SEC.2.
Last modified: May 27, 2006