2013 Kentucky Revised Statutes CHAPTER 386 - ADMINISTRATION OF TRUSTS -- LEGAL INVESTMENTS -- UNIFORM PRINCIPAL AND INCOME ACT 386.456 Determination and distribution of net income.
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386.456
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) A fiduciary of an estate or of a terminating income interest shall determine the
amount of net income and net principal receipts received from property
specifically given to a beneficiary under the rules in Articles 3, 4, and 5 of the
Kentucky Principal and Income Act that apply to trustees and the rules in
subsection (5) of this section. The fiduciary shall distribute the net income and
net principal receipts to the beneficiary who is to receive the specific property.
(2) A fiduciary shall determine the remaining net income of a decedent's estate or
a terminating income interest under the rules in Articles 3, 4, and 5 of the
Kentucky Principal and Income Act that apply to trustees and by:
(a) Including in net income all income from property used to discharge
liabilities;
(b) Paying from income or principal, in the fiduciary's discretion, fees to
attorneys, accountants, and fiduciaries; court costs and other expenses of
administration; and interest on death taxes, but the fiduciary may pay
those expenses from income of property passing to a trust for which the
fiduciary claims an estate tax marital or charitable deduction only to the
extent that the payment of those expenses from income will not cause the
reduction or loss of the deduction; and
(c) Paying from principal all other disbursements made or incurred in
connection with the settlement of a decedent's estate or the winding up of
a terminating income interest, including debts, funeral expenses,
disposition of remains, family allowances, and death taxes and related
penalties that are apportioned to the estate or terminating income interest
by the will, the terms of the trust, or applicable law.
(3) A fiduciary shall distribute to a beneficiary who receives a pecuniary amount
outright the interest or any other amount provided by the will, the terms of the
trust, or applicable law from net income determined under subsection (2) of this
section, or from principal to the extent that net income is insufficient. If a
beneficiary is to receive a pecuniary amount outright from a trust after an
income interest ends and no interest or other amount is provided for by the
terms of the trust or applicable law, the fiduciary shall distribute the interest or
other amount to which the beneficiary would be entitled under applicable law if
the pecuniary amount were required to be paid under a will.
(4) A fiduciary shall distribute the net income remaining after distributions required
by subsection (3) of this section in the manner described in KRS 386.458 to all
other beneficiaries, including a beneficiary who receives a pecuniary amount in
trust, even if the beneficiary holds an unqualified power to withdraw assets
from the trust or other presently exercisable general power of appointment over
the trust.
(5) A fiduciary shall not reduce principal or income receipts from property
described in subsection (1) of this section because of a payment described in
KRS 386.490 to the extent that the will, the terms of the trust, or applicable law
requires the fiduciary to make the payment from assets other than the property
or to the extent that the fiduciary recovers or expects to recover the payment
from a third party. The net income and principal receipts from the property are
determined by including all of the amounts the fiduciary receives or pays with
respect to the property, whether those amounts accrued or became due
before, on, or after the date of a decedent's death or an income interest's
terminating event, and by making a reasonable provision for amounts that the
fiduciary believes the estate or terminating income interest may become
obligated to pay after the property is distributed.
Effective:January 1, 2005
History: Created 2004 Ky. Acts ch. 158, sec. 4, effective January 1, 2005.
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