2006 Alabama Code - Section 19-3A-409 — Deferred compensation, annuities, and similar payments.
(a) In this section, "payment" means a payment that a fiduciary may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payer in exchange for future payments. The term includes a payment made in money or property from the payer's general assets or from a separate fund created by the payer, including a private or commercial annuity, an individual retirement account, and a pension, profit-sharing, stock-bonus, or stock-ownership plan.
(b) To the extent that a payment or portion thereof is characterized by other sections of this chapter as income in the hands of the payer, a fiduciary shall allocate such payment or portion thereof to income. The fiduciary shall allocate to principal the balance of the payment and any other payment received in the same accounting period that is not characterized as income to the payer by other sections of this chapter.
(c) To the extent that a payment is not allocated between income and principal pursuant to subsection (b), a fiduciary shall allocate to income ten percent (10%) of the part that is required to be made during the accounting period and the balance to principal. If no part of a payment is required to be made or if the payment received by the fiduciary is the entire amount to which the fiduciary is entitled, then the fiduciary shall allocate the entire payment to principal. For purposes of this subsection, a payment is not "required to be made" to the extent that it is made because the fiduciary exercises a right of withdrawal.
(d) If, to obtain an estate tax marital deduction for a trust, a fiduciary must allocate more of a payment to income than that provided for by this section, then the fiduciary shall allocate to income the additional amount necessary to obtain the marital deduction.
(e) This section does not apply to payments to which Section 19-3A-410 applies.
(Act 2000-675, p. 1343, §1.)
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