2010 Pennsylvania Code
Title 20 - DECEDENTS, ESTATES AND FIDUCIARIES
Chapter 81 - Principal and Income
8107 - Express trusts.

     § 8107.  Express trusts.
        (a)  General rule.--In the absence of a contrary intent
     appearing in the governing instrument of an express unitrust,
     the governing instrument shall be construed in accordance with
     the following rules:
            (1)  The trustee shall follow an investment policy
        seeking a total return for the investments held by the trust,
        whether the return is to be derived from:
                (i)  appreciation of capital;
                (ii)  earnings and distributions from capital; or
                (iii)  both.
            (2)  The unitrust distribution shall be an annual
        distribution of an amount equal to 4% of the net fair market
        value of the trust's assets, whether the assets would be
        considered income or principal under other provisions of this
        chapter, averaged over the lesser of:
                (i)  the three preceding years; or
                (ii)  the period during which the trust has been in
            existence.
            (3)  The trustee may, in the trustee's discretion from
        time to time, determine all of the following:
                (i)  The provisions for prorating a unitrust
            distribution for a short year in which the beneficiary's
            right to payments commences or ceases.
                (ii)  The frequency of unitrust distributions during
            the year.
                (iii)  The effect of other payments from or
            contributions to the trust on the trust's valuation.
                (iv)  Whether to value the trust's assets annually or
            more frequently.
                (v)  What valuation dates to use.
                (vi)  How frequently to value nonliquid assets and
            whether to estimate their value.
                (vii)  Whether to omit from the calculations
            residential real estate, tangible personal property or
            other trust property used, occupied or possessed by a
            beneficiary.
                (viii)  Any other matters necessary for the proper
            functioning of the unitrust.
            (4)  Expenses which would be deducted from income if the
        trust were not a unitrust shall not be deducted from the
        unitrust distribution.
            (5)  The unitrust distribution shall be considered to
        have been paid from the following sources in order of
        priority:
                (i)  net income determined as if the trust were not
            an express unitrust;
                (ii)  ordinary income for Federal income tax purposes
            that is not allocable to net income under subparagraph
            (i);
                (iii)  net realized short-term capital gains for
            Federal income tax purposes;
                (iv)  net realized long-term capital gains for
            Federal income tax purposes; and
                (v)  the principal of the trust estate.
        (b)  Definition.--As used in this section, the term "express
     unitrust" shall mean a trust which by its governing instrument
     creates a trust, other than a trust solely for charitable
     purposes or a qualified charitable split interest trust under
     section 664(d) or 170(f)(2)(B) of the Internal Revenue Code of
     1986 (Public Law 99-514, 26 U.S.C. § 664(d) or 170(f)(2)(B)),
     and provides for an annual distribution, the unitrust
     distribution, equal to a fixed percentage of the net fair market
     value of the trust's assets, valued at least annually, and
     computed with reference to such value in one or more years. If
     the fixed percentage is not less than 3% nor more than 5%, the
     unitrust distribution shall be considered the income of the
     trust for the purposes of this chapter.
     (July 7, 2006, P.L.625, No.98, eff. 60 days)