2013 Kentucky Revised Statutes CHAPTER 386 - ADMINISTRATION OF TRUSTS -- LEGAL INVESTMENTS -- UNIFORM PRINCIPAL AND INCOME ACT 386.480 Receipts from deferred compensation, annuities, and similar payments -- Exceptions -- Allocations of payments made from a separate fund.
Download as PDF
386.480 Receipts from deferred compensation, annuities, and similar
payments -- Exceptions -- Allocations of payments made from a separate
fund.
(1)
(2)
(3)
(4)
(5)
(6)
As used in this section:
(a) "Payment" means a payment that a trustee may receive over a fixed
number of years or during the life of one (1) 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. For purposes of subsections (4), (5), (6), and (7) of this
section, the term also includes any payment from any separate fund,
regardless of the reason for the payment; and
(b) "Separate fund" includes a private or commercial annuity, an individual
retirement account, and a pension profit-sharing, stock-bonus, or
stock-ownership plan.
To the extent that a payment is characterized as interest or a dividend or a
payment made in lieu of interest or a dividend, a trustee shall allocate it to
income. The trustee shall allocate to principal the balance of the payment and
any other payment received in the same accounting period that is not
characterized as interest, a dividend, or an equivalent payment.
If no part of a payment is characterized as interest, a dividend, or an equivalent
payment and all or part of the payment is required to be made, a trustee 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 the payment received is the entire amount
to which the trustee is entitled, the trustee 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 trustee exercises a right of
withdrawal.
Except as otherwise provided in subsection (5) of this section, subsections (6)
and (7) of this section shall apply, and subsections (2) and (3) of this section
shall not apply, in determining the allocation of a payment made from a
separate fund to:
(a) A trust to which an election to qualify for a marital deduction under 26
U.S.C. sec. 2056(b)(7) has been made; or
(b) A trust that qualifies for the marital deduction under 26 U.S.C. sec.
2056(b)(5).
Subsections (4), (6), and (7) of this section shall not apply if and to the extent
that the series of payments would, without the application of subsection (4) of
this section, qualify for the marital deduction under 26 U.S.C sec.
2056(b)(7)(C).
A trustee shall determine the internal income of each separate fund for the
accounting period as if the separate fund were a trust subject to KRS 386.450
to 386.504. Upon request of the surviving spouse, the trustee shall demand
that the person administering the separate fund distribute the internal income
to the trust. The trustee shall allocate a payment from the separate fund to
(7)
(8)
income to the extent of the internal income of the separate fund and distribute
that amount to the surviving spouse. The trustee shall allocate the balance of
the payment to principal. Upon request of the surviving spouse, the trustee
shall allocate principal to income to the extent the internal income of the
separate fund exceeds payments made from the separate fund to the trust
during the accounting period.
If a trustee cannot determine the internal income of a separate fund but can
determine the value of the separate fund, the internal income of the separate
fund is deemed to equal three percent (3%) of the fund's value, according to
the most recent statement of value preceding the beginning of the accounting
period. If the trustee can determine neither the internal income of the separate
fund nor the fund's value, the internal income of the fund is deemed to equal
the product of the interest rate and the present value of the expected future
payments, as determined under 26 U.S.C. sec. 7520, for the month preceding
the accounting period for which the computation is made.
This section shall not apply to payments to which KRS 386.482 applies.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 21, sec. 7, effective July 15, 2010. -- Created
2004 Ky. Acts ch. 158, sec. 16, effective January 1, 2005.
Disclaimer: These codes may not be the most recent version. Kentucky may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.