2016 Kentucky Revised Statutes CHAPTER 386 - ADMINISTRATION OF TRUSTS -- LEGAL INVESTMENTS -- UNIFORM PRINCIPAL AND INCOME ACT .470 Principal receipts.
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386.470 Principal receipts.
A trustee shall allocate to principal:
(1) To the extent not allocated to income under KRS 386.450 to 386.504, assets
received from a transferor during the transferor's lifetime, a decedent's estate, a trust
with a terminating income interest, or a payer under a contract naming the trust or
its trustee as beneficiary;
(2) Money or other property received from the sale, exchange, liquidation, or change in
form of a principal asset, including stock splits and realized profit, subject to this
article;
(3) Amounts recovered from third parties to reimburse the trust because of
disbursements described in KRS 386.492(1)(g) or for other reasons to the extent not
based on the loss of income;
(4) Proceeds of property taken by eminent domain, but a separate award made for the
loss of income with respect to an accounting period during which a current income
beneficiary had a mandatory income interest is income;
(5) Net income received in an accounting period during which there is no beneficiary to
whom a trustee may or shall distribute income;
(6) If a trustee grants an option to buy property from the trust, whether or not the trust
owns the property when the option is granted, grants an option that permits another
person to sell property to the trust, or acquires an option to buy property for the trust
or an option to sell an asset owned by the trust, and the trustee or other owner of the
asset is required to deliver the asset if the option is exercised, an amount received
for granting the option shall be allocated to principal. An amount paid to acquire the
option shall be paid from principal. A gain or loss realized upon the exercise of an
option, including an option granted to a settlor of the trust for services rendered,
shall be allocated to principal; and
(7) Other receipts as provided in KRS 386.478, 386.480, 386.482, 386.484, 386.486,
and 386.488.
Effective: January 1, 2005
History: Created 2004 Ky. Acts ch. 158, sec. 11, effective January 1, 2005.
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