North Carolina General Statutes Chapter 37A Uniform Principal and Income Act

Article 1 - Definitions and Fiduciary Duties; Conversion to Unitrust; Judicial Control of Discretionary Power.

N.C. Gen. Stat. § 37A-1-101. Short title
This Chapter may be cited as the Uniform Principal and Income Act. (2003-232, s. 2.)
N.C. Gen. Stat. § 37A-1-102. Definitions
The following definitions apply in this Chapter: (1) "Accounting period" means a calendar year unless another 12-month period is selected by a fiduciary. The...
N.C. Gen. Stat. § 37A-1-103. Fiduciary duties; general principles
(a) In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of Articles 2...
N.C. Gen. Stat. § 37A-1-104. Trustee's power to adjust
(a) A trustee may adjust between principal and income to the extent the trustee considers necessary if the trustee invests and manages trust assets...
N.C. Gen. Stat. § 37A-1-104.1. Definitions
The following definitions apply to this Part: (1) Code. - The Internal Revenue Code of 1986, as amended from time to time, and any...
N.C. Gen. Stat. § 37A-1-104.2. Conversion in trustee's discretion without court approval
(a) Any trustee, other than an interested trustee, or, where two or more persons are acting as trustees, a majority of the trustees who...
N.C. Gen. Stat. § 37A-1-104.3. Conversion with court approval
(a) If any trustee desires to (i) convert an income trust to a total return unitrust, (ii) reconvert a total return unitrust to an...
N.C. Gen. Stat. § 37A-1-104.4. Determination of unitrust amount
(a) The fair market value of the trust shall be determined at least annually, using a valuation date selected by the trustee in its...
N.C. Gen. Stat. § 37A-1-104.5. Matters in trustee's discretion
In administering a total return unitrust, the trustee may, in its sole discretion but subject to the provisions of the governing instrument, determine: (1)...
N.C. Gen. Stat. § 37A-1-104.6. No effect on principal distributions
Conversion to a total return unitrust under this Part shall not affect any other provision of the governing instrument, if any, regarding distributions of...
N.C. Gen. Stat. § 37A-1-104.7. Repealed by Session Laws 2007-106, s. 49.1, effective October 1, 2007
N.C. Gen. Stat. § 37A-1-104.8. No liability on part of trustee or disinterested person acting in good faith
No trustee or disinterested person who in good faith takes or fails to take any action under this Part shall be liable to any...
N.C. Gen. Stat. § 37A-1-104.9. Applicability
This Part shall apply to all trusts in existence on, or created after January 1, 2004, unless (i) the governing instrument contains a provision...
N.C. Gen. Stat. § 37A-1-104.21. Definitions
(a) An "express total return unitrust" means a trust that has a governing instrument requiring the distribution at least annually of a unitrust amount...
N.C. Gen. Stat. § 37A-1-104.22. Determination of unitrust amount
(a) The unitrust amount to be distributed by the express total return unitrust may be determined in the governing instrument by reference to the...
N.C. Gen. Stat. § 37A-1-104.23. Effect of distribution of unitrust amount
The distribution from an express total return unitrust of the fixed percentage of not less than three percent (3%) nor more than five percent...
N.C. Gen. Stat. § 37A-1-104.24. Change or conversion of unitrust amount
(a) The terms of the governing instrument of an express total return unitrust may provide the method similar to the method provided under G.S....
N.C. Gen. Stat. § 37A-1-104.25. Determination of character of unitrust amount
Unless the terms of the governing instrument of the express total return unitrust specifically provide otherwise, the trustee: (1) Shall consider the unitrust amount...
N.C. Gen. Stat. § 37A-1-104.26. Unitrust amount in excess of a five percent payout
A trust that provides for a fixed percentage payout in excess of five percent (5%) per year is considered an express total return unitrust...
N.C. Gen. Stat. § 37A-1-105. Judicial control of discretionary power
(a) The court shall not order a fiduciary to change a decision to exercise or not to exercise a discretionary power conferred by this...

Article 2 - Decedent's Estate or Terminating Income Interest.

N.C. Gen. Stat. § 37A-2-201. 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)...
N.C. Gen. Stat. § 37A-2-202. Distribution to residuary and remainder beneficiaries
(a) Each beneficiary described in G.S. 37A-2-201(4) is entitled to receive a portion of the net income equal to the beneficiary's fractional interest in...

Article 3 - Apportionment at Beginning and End of Income Interest.

N.C. Gen. Stat. § 37A-3-301. When right to income begins and ends
(a) An income beneficiary is entitled to net income from the date on which the income interest begins. An income interest begins on the...
N.C. Gen. Stat. § 37A-3-302. Apportionment of receipts and disbursements when decedent dies or income interest begins
(a) A trustee shall allocate an income receipt or disbursement, other than one to which G.S. 37A-2-201(1) applies to principal, if its due date...
N.C. Gen. Stat. § 37A-3-303. Apportionment when income interest ends
(a) In this section, "undistributed income" means net income received before the date on which an income interest ends. The term does not include...

Article 4 - Allocation of Receipts During Administration of Trust.

N.C. Gen. Stat. § 37A-4-401. Character of receipts
(a) In this section, "entity" means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund, or any...
N.C. Gen. Stat. § 37A-4-402. Distribution from trust or estate
A trustee shall allocate to income an amount received as a distribution of income from a trust or an estate in which the trust...
N.C. Gen. Stat. § 37A-4-403. Business and other activities conducted by trustee
(a) If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to...
N.C. Gen. Stat. § 37A-4-404. Principal receipts
A trustee shall allocate to principal: (1) To the extent not allocated to income under this Chapter, assets received from a transferor during the...
N.C. Gen. Stat. § 37A-4-405. Rental property
To the extent that a trustee accounts for receipts from rental property under this section, the trustee shall allocate to income an amount received...
N.C. Gen. Stat. § 37A-4-406. Obligation to pay money
(a) An amount received as interest, whether determined at a fixed, variable, or floating rate, on an obligation to pay money to the trustee,...
N.C. Gen. Stat. § 37A-4-407. Insurance policies and similar contracts
(a) Except as otherwise provided in subsection (b) of this section, a trustee shall allocate to principal the proceeds of a life insurance policy...
N.C. Gen. Stat. § 37A-4-408. Insubstantial allocations not required
If a trustee determines that an allocation between principal and income required by G.S. 37A-4-409, 37A-4-410, 37A-4-411, 37A-4-412, or 37A-4-415 is insubstantial, the trustee...
N.C. Gen. Stat. § 37A-4-409. Deferred compensation, annuities, and similar payments
(a) In this section: (1) "Payment" means a payment that a trustee may receive over a fixed number of years or during the life...
N.C. Gen. Stat. § 37A-4-410. Liquidating asset
(a) In this section, "liquidating asset" means an asset whose value will diminish or terminate because the asset is expected to produce receipts for...
N.C. Gen. Stat. § 37A-4-411. Minerals, water, and other natural resources
(a) To the extent that a trustee accounts for receipts from an interest in minerals or other natural resources under this section, the trustee...
N.C. Gen. Stat. § 37A-4-412. Timber
(a) To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee...
N.C. Gen. Stat. § 37A-4-413. Property not productive of income
(a) If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide...
N.C. Gen. Stat. § 37A-4-414. Derivatives and options
(a) In this section, "derivative" means a contract or financial instrument or a combination of contracts and financial instruments that gives a trust the...
N.C. Gen. Stat. § 37A-4-415. Asset-backed securities
(a) In this section, "asset-backed security" means an asset whose value is based upon the right it gives the owner to receive distributions from...

Article 5 - Allocation of Disbursements During Administration of Trust.

N.C. Gen. Stat. § 37A-5-501. Disbursements from income
A trustee shall make the following disbursements from income to the extent that they are not disbursements to which G.S. 37A-2-201(2)b. or G.S. 37A-2-201(2)c....
N.C. Gen. Stat. § 37A-5-502. Disbursements from principal
(a) A trustee shall make the following disbursements from principal: (1) The remaining one-half of the disbursements described in G.S. 37A-5-501(1) and G.S. 37A-5-501(2);...
N.C. Gen. Stat. § 37A-5-503. Transfers from income to principal for depreciation
(a) In this section, "depreciation" means a reduction in value due to wear, tear, decay, corrosion, or gradual obsolescence of a fixed asset having...
N.C. Gen. Stat. § 37A-5-504. Transfers from income to reimburse principal
(a) If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from...
N.C. Gen. Stat. § 37A-5-505. Income taxes
(a) A tax required to be paid by a trustee based on receipts allocated to income shall be paid from income. (b) A tax...
N.C. Gen. Stat. § 37A-5-506. Adjustments between principal and income because of taxes
(a) A fiduciary may make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and...

Article 6 - Miscellaneous Provisions.

N.C. Gen. Stat. § 37A-6-601. Uniformity of application and construction
In applying and construing this Chapter, consideration shall be given to the need to promote uniformity of the law with respect to its subject...
N.C. Gen. Stat. § 37A-6-602. Severability clause
If any provision of this Chapter or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions...

Last modified: March 23, 2014