Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 45 First Substitute (2020GS)

Sponsor

Sen. Hillyard, L.

Final action

Governor Signed 3/30/2020

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• modifies definitions;
• clarifies language of the Uniform Fiduciary Income and Principal Act;
• resolves a conflict between the Uniform Fiduciary Income and Principal Act and the Uniform Directed Trust Act regarding the terms of a trust;
• modifies dates to reflect the effective date of the Uniform Fiduciary Income and Principal Act; and
• makes technical and conforming changes.

Every vote on this bill

Bill text

UNIFORM FIDUCIARY INCOME AND PRINCIPAL ACT
AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Lyle W. Hillyard
House Sponsor: 
V. Lowry Snow
LONG TITLE
General Description:
This bill amends provisions of the Uniform Fiduciary Income and Principal Act.
Highlighted Provisions:
This bill:
▸ modifies definitions;
▸ clarifies language of the Uniform Fiduciary Income and Principal Act;
▸ resolves a conflict between the Uniform Fiduciary Income and Principal Act and the
Uniform Directed Trust Act regarding the terms of a trust;
▸ modifies dates to reflect the effective date of the Uniform Fiduciary Income and
Principal Act; and
▸ makes technical and conforming changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
Utah Code Sections Affected:
AMENDS:
22-3-102
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-104
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-201
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-202
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-203
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-301
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-302
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-303
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-304
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-305
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-307
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-308
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-309
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-401
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-402
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-403
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-404
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-405
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-407
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-409
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-411
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-412
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-414
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-415
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-505
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-506
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-507
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-601
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-602
 (Effective 07/01/20)
, as repealed and reenacted by Laws of Utah 2019,
Chapter 495
22-3-701
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-702
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-703
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-801
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-803
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
22-3-804
 (Effective 07/01/20)
, as enacted by Laws of Utah 2019, Chapter 495
75-7-103
 (Superseded 07/01/20)
, as last amended by Laws of Utah 2019, Chapter 153
75-7-103
 (Effective 07/01/20)
, as last amended by Laws of Utah 2019, Chapters 153
and 495
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
22-3-102 (Effective 07/01/20)
 is amended to read:
22-3-102 (Effective 07/01/20).
Definitions.
In this chapter:
(1) (a) "Accounting period" means a calendar year, unless a fiduciary selects another
period of 12 calendar months or approximately 12 calendar months.
(b) "Accounting period" includes a part of a calendar year or another period of 12
calendar months or approximately 12 calendar months that begins when an income interest
begins or ends when an income interest ends.
(2) (a) "Asset-backed security" means a security that is serviced primarily by the cash
flows of a discrete pool of fixed or revolving receivables or other financial assets that by [
their
]
the financial assets'
 terms convert into cash within a finite time.
(b) "Asset-backed security" includes rights or other assets that ensure the servicing or
timely distribution of proceeds to the holder of the asset-backed security.
(c) "Asset-backed security" does not include an asset to which Section 
22-3-401
,
22-3-409
, or 
22-3-414
 applies.
(3) "Beneficiary" includes:
(a) for a trust:
(i) a current beneficiary, including a current income beneficiary and a beneficiary that
may receive only principal;
(ii) a remainder beneficiary; and
(iii) any other successor beneficiary;
(b) for an estate, an heir and devisee; and
(c) for a life estate or term interest, a person that holds a life estate, term interest, or
remainder, or other interest following a life estate or term interest.
(4) "Court" means a court [
of competent jurisdiction in the state
] 
in this state with
jurisdiction over a trust or estate, or a life estate or other term interest described in Subsection
22-3-103
(2)
.
(5) "Current income beneficiary" means a beneficiary to which a fiduciary may
distribute net income, [
whether
] 
even if
 the fiduciary also may distribute principal to the
beneficiary.
(6) (a) "Distribution" means a payment or transfer by a fiduciary to a beneficiary in the
beneficiary's capacity as a beneficiary, made under the terms of the trust, without consideration
other than the beneficiary's right to receive the payment or transfer under the terms of the trust.
(b) "Distribute," "distributed," and "distributee" have corresponding meanings.
(7) (a) "Estate" means a decedent's estate.
(b) "Estate" includes the property of the decedent as the estate is originally constituted
and the property of the estate as it exists at any time during administration.
(8) "Fiduciary" includes:
(a) a trustee, 
trust director as defined in Section 
75-12-102
,
 personal representative, life
tenant, holder of a term interest, and person acting under a delegation from a fiduciary;
(b) a person that holds property for a successor beneficiary whose interest may be
affected by an allocation of receipts and expenditures between income and principal; and
(c) if there are two or more co-fiduciaries, all co-fiduciaries acting under the terms of
the trust and applicable law.
(9) (a) "Income" means money or other property a fiduciary receives as current return
from principal.
(b) "Income" includes a part of receipts from a sale, exchange, or liquidation of a
principal asset to the extent provided in Part 4, Allocation of Receipts.
(10) (a) "Income interest" means the right of a current income beneficiary to receive all
or part of net income, whether the terms of the trust require the net income to be distributed or
authorize the net income to be distributed in the fiduciary's discretion.
(b) "Income interest" includes the right of a current beneficiary to use property held by
a fiduciary.
(11) "Independent person" means a person that is not:
(a) for a trust:
(i) a qualified beneficiary as determined under Section 
75-7-103
;
(ii) a settlor of the trust; or
(iii) an individual whose legal obligation to support a beneficiary may be satisfied by a
distribution from the trust;
(b) for an estate, a beneficiary;
(c) a spouse, parent, brother, sister, or issue of an individual described in Subsection
(11)(a) or (b);
(d) a corporation, partnership, limited liability company, or other entity in which
persons described in Subsections (11)(a) through (c), in the aggregate, have voting control; or
(e) an employee of a person described in Subsection (11)(a), (b), (c), or (d).
(12) "Mandatory income interest" means the right of a current income beneficiary to
receive net income that the terms of the trust require the fiduciary to distribute.
(13) (a) "Net income" means:
(i) the total allocations during an accounting period to income under the terms of a trust
and this chapter minus the disbursements during the 
accounting
 period, other than
distributions, allocated to income under the terms of the trust and this chapter; and
(ii) to the extent the trust is a unitrust under Part 3, Unitrust, the unitrust amount
determined under Part 3, Unitrust.
(b) "Net income" includes an adjustment from principal to income under Section
22-3-203
.
(c) "Net income" does not include an adjustment from income to principal under
Section 
22-3-203
.
(14) "Person" means
:
(a)
 an individual[
,
]
;
(b) an
 estate[
,
]
;
(c) a
 trust[
,
]
;
(d) a
 business or nonprofit entity[
,
]
;
(e) a
 public corporation, government or governmental subdivision, agency, or
instrumentality[
,
]
;
 or
(f) any
 other legal entity.
(15) "Personal representative" means an executor, administrator, successor personal
representative, special administrator, or person that performs substantially the same function
with respect to an estate under the law governing the person's status.
(16) "Principal" means property held in trust for distribution to, production of income
for, or use by a current or successor beneficiary.
(17) "Record" means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.
(18) "Settlor" means the same as that term is defined in Section 
75-7-103
.
(19) "Special tax benefit" means:
(a) exclusion of a transfer to a trust from gifts described in Section 2503(b) of the
Internal Revenue Code because of the qualification of an income interest in the trust as a
present interest in property;
(b) status as a qualified subchapter S trust described in Section 1361(d)(3) of the
Internal Revenue Code at a time the trust holds stock of an S corporation described in Section
1361(a)(1) of the Internal Revenue Code;
(c) an estate or gift tax marital deduction for a transfer to a trust under Section 2056 or
2523 of the Internal Revenue Code that depends or depended in whole or in part on the right of
the settlor's spouse to receive the net income of the trust;
(d) exemption in whole or in part of a trust from the federal generation-skipping
transfer tax imposed by Section 2601 of the Internal Revenue Code because the trust was
irrevocable on September 25, 1985, if there is any possibility that:
(i) a taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code,
could be made from the trust; or
(ii) a taxable termination, as defined in Section 2612(a) of the Internal Revenue Code,
could occur with respect to the trust; or
(e) an inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code, of
the trust which is less than one, if there is any possibility that:
(i) a taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code,
could be made from the trust; or
(ii) a taxable termination, as defined in Section 2612(a) of the Internal Revenue Code,
could occur with respect to the trust.
(20) "Successive interest" means the interest of a successor beneficiary.
(21) "Successor beneficiary" means a person entitled to receive income or principal or 
to use property when an income interest or other current interest ends.
(22) "Terms of a trust" means:
(a) except as otherwise provided in Subsection (22)(b), the manifestation of the
settlor's intent regarding a trust's provisions as:
(i) expressed in the trust instrument; or
(ii) established by other evidence that would be admissible in a judicial proceeding;
(b) the trust's provisions as established, determined, or amended by:
(i) a trustee or trust director in accordance with applicable law;
(ii) 
a
 court order; or
(iii) a nonjudicial settlement agreement under Section 
75-7-110
;
(c) for an estate, a will; or
(d) for a life estate or term interest, the corresponding manifestation of the rights of the
beneficiaries.
(23) (a) "Trust" includes:
(i) an express trust, private or charitable, with additions to the trust, wherever and
however created; and
(ii) a trust created or determined by judgment or decree under which the trust is to be
administered in the manner of an express trust.
(b) "Trust" does not include:
(i) a constructive trust;
(ii) a resulting trust, conservatorship, guardianship, multi-party account, custodial
arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or
trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits,
pensions, retirement benefits, or employee benefits of any kind; or
(iii) an arrangement under which a person is a nominee, escrowee, or agent for another.
(24) (a) "Trustee" means a person, other than a personal representative, that owns or
holds property for the benefit of a beneficiary.
(b) "Trustee" includes an original, additional, or successor trustee, whether appointed
or confirmed by a court.
(25) (a) "Will" means any testamentary instrument recognized by applicable law
[
which
] 
that
 makes a legally effective disposition of an individual's property[
,
] effective at the
individual's death.
(b) "Will" includes a codicil or other amendment to a testamentary instrument.
Section 2. Section 
22-3-104 (Effective 07/01/20)
 is amended to read:
22-3-104 (Effective 07/01/20).
Governing law.
(1) Except as otherwise provided in the terms of a trust or this chapter, this chapter
applies when this state is
:
(a)
 the principal place of administration of a trust or estate
;
 or
(b)
 the situs of property that is not held in a trust or estate and is subject to a life estate
or other term interest described in Subsection 
22-3-103
(2).
(2) By accepting the trusteeship of a trust having [
its
] 
the trust's
 principal place of
administration in this state or by moving the principal place of administration of a trust to this
state, the trustee submits to the application of this chapter to any matter within the scope of this
chapter involving the trust.
Section 3. Section 
22-3-201 (Effective 07/01/20)
 is amended to read:
22-3-201 (Effective 07/01/20).
Fiduciary duties -- General principles.
(1) In making an allocation or determination or exercising discretion under this
chapter, a fiduciary shall:
(a) act in good faith, based on what is fair and reasonable to all beneficiaries;
(b) administer a trust or estate impartially, except to the extent the terms of the trust
manifest an intent that the fiduciary shall or may favor one or more beneficiaries;
(c) administer the trust or estate in accordance with the terms of the trust, even if there
is a different provision in this chapter; and
(d) administer the trust or estate in accordance with this chapter, except to the extent
the terms of the trust provide otherwise or authorize the fiduciary to determine otherwise.
(2) (a) A fiduciary's allocation, determination, or exercise of discretion under this
chapter is presumed to be fair and reasonable to all beneficiaries.
(b) A fiduciary may exercise a discretionary power of administration given to the
fiduciary by the terms of the trust, and an exercise of the power that produces a result different
from a result required or permitted by this chapter does not create an inference that the
fiduciary abused the fiduciary's discretion.
(3) A fiduciary shall:
(a) add a receipt to principal, to the extent neither the terms of the trust nor this chapter
allocates the receipt between income and principal; and
(b) charge a disbursement to principal, to the extent neither the terms of the trust nor
this chapter allocates the disbursement between income and principal.
(4) [
A
] 
If a fiduciary determines an exercise of discretionary power will assist the
fiduciary to administer the trust or estate impartially, the
 fiduciary may
:
(a)
 exercise the power to adjust under Section 
22-3-203
[
,
]
;
(b)
 convert an income trust to a unitrust under Subsection 
22-3-303
(1)(a)[
,
]
;
(c)
 change the percentage or method used to calculate a unitrust amount under
Subsection 
22-3-303
(1)(b)[
,
]
;
 or
(d) 
 convert a unitrust to an income trust under Subsection 
22-3-303
(1)(c)[
, if the
fiduciary determines the exercise of the power will assist the fiduciary to administer the trust or
estate impartially
].
[
(5) Factors the fiduciary must consider in making the determination under Subsection
(4) include:
]
(5) In making the determination under Subsection (4), the fiduciary shall consider the
following factors:
(a) the terms of the trust;
(b) the nature, distribution standards, and expected duration of the trust;
(c) the effect of the allocation rules, including specific adjustments between income
and principal, under Part 4, Allocation of Receipts, Part 5, Allocation of Disbursements, Part 6,
Death of Individual or Termination of Income Interest, and Part 7, Apportionment at Beginning
and End of Income Interest;
(d) the desirability of liquidity and regularity of income;
(e) the desirability of the preservation and appreciation of principal;
(f) the extent to which an asset is used or may be used by a beneficiary;
(g) the increase or decrease in the value of principal assets, reasonably determined by
the fiduciary;
(h) whether and to what extent the terms of the trust
:
(i)
 give the fiduciary power to accumulate income or invade principal
;
 or
(ii)
 prohibit the fiduciary from accumulating income or invading principal;
(i) the extent to which the fiduciary has accumulated income or invaded principal in
preceding accounting periods;
(j) the effect of current and reasonably expected economic conditions; and
(k) the reasonably expected tax consequences of the exercise of the power.
Section 4. Section 
22-3-202 (Effective 07/01/20)
 is amended to read:
22-3-202 (Effective 07/01/20).
Judicial review of exercise of discretionary power --
Request for instruction.
(1) In this section, "fiduciary decision" means:
(a) a fiduciary's allocation between income and principal or other determination
regarding income and principal required or authorized by the terms of the trust or this chapter;
(b) the fiduciary's exercise or nonexercise of a discretionary power regarding income
and principal granted by the terms of the trust or this chapter, including the power to
:
(i)
 adjust under Section 
22-3-203
[
,
]
;
(ii)
 convert an income trust to a unitrust under Subsection 
22-3-303
(1)(a)[
,
]
;
(iii)
 change the percentage or method used to calculate a unitrust amount under
Subsection 
22-3-303
(1)(b)[
,
]
;
 or
(iv)
 convert a unitrust to an income trust under Subsection 
22-3-303
(1)(c); or
(c) the fiduciary's implementation of a decision described in Subsection (1)(a) or (b).
(2) The court may not order a fiduciary to change a fiduciary decision
,
 unless the court
determines that the fiduciary decision was an abuse of the fiduciary's discretion.
(3) (a) If the court determines that a fiduciary decision was an abuse of the fiduciary's
discretion, the court may order a remedy authorized by law, including a remedy authorized in
Section 
75-7-1001
.
(b) To place the beneficiaries in the positions 
that
 the beneficiaries would have
occupied if there had not been an abuse of the fiduciary's discretion, the court may order:
(i) the fiduciary to exercise or refrain from exercising the power to adjust under Section
22-3-203
;
(ii) the fiduciary to exercise or refrain from exercising the power to
:
(A)
 convert an income trust to a unitrust under Subsection 
22-3-303
(1)(a)[
,
]
;
(B)
 change the percentage or method used to calculate a unitrust amount under
Subsection 
22-3-303
(1)(b)[
,
]
;
 or
(C)
 convert a unitrust to an income trust under Subsection 
22-3-303
(1)(c);
(iii) the fiduciary to distribute an amount to a beneficiary;
(iv) a beneficiary to return some or all of a distribution; or
(v) the fiduciary to withhold an amount from one or more future distributions to a
beneficiary.
(4) (a) On petition by a fiduciary for instruction, the court may determine whether a
proposed fiduciary decision will result in an abuse of the fiduciary's discretion.
(b) A beneficiary that opposes the proposed decision has the burden to establish that
the proposed decision will result in an abuse of the fiduciary's discretion if the petition:
(i) describes the proposed decision;
(ii) contains sufficient information to inform the beneficiary of the reasons for making
the proposed decision and the facts on which the fiduciary relies; and
(iii) explains how the beneficiary will be affected by the proposed decision.
Section 5. Section 
22-3-203 (Effective 07/01/20)
 is amended to read:
22-3-203 (Effective 07/01/20).
Fiduciary's power to adjust.
(1) Except as otherwise provided in the terms of a trust or this section, a fiduciary, in a
record, without court approval, may adjust between income and principal if the fiduciary
determines the exercise of the power to adjust will assist the fiduciary to administer the trust or
estate impartially.
(2) This section does not create a duty to exercise or consider the power to adjust under
Subsection (1) or to inform a beneficiary about the applicability of this section.
(3) A fiduciary that in good faith exercises or fails to exercise the power to adjust under
Subsection (1) is not liable to a person affected by the exercise or failure to exercise.
(4) In deciding whether and to what extent to exercise the power to adjust under
Subsection (1), a fiduciary shall consider all factors the fiduciary considers relevant, including
the
 relevant factors in Subsection 
22-3-201
(5) and the application of Subsection 
22-3-401
(9),
Section 
22-3-408
, and Section 
22-3-413
.
(5) A fiduciary may not exercise the power 
to make an adjustment
 under Subsection
(1) [
to make an adjustment
] or 
the power to make a determination that an allocation is
insubstantial
 under Section 
22-3-408
 [
to make a determination that an allocation is
insubstantial
] if:
(a) the adjustment or determination would reduce the amount payable to a current
income beneficiary from a trust that qualifies for a special tax benefit, except to the extent the
adjustment is made to provide for a reasonable apportionment of the total return of the trust
between the current income beneficiary and successor beneficiaries;
(b) the adjustment or determination would change the amount payable to a beneficiary,
as a fixed annuity or a fixed fraction of the value of the trust assets, under the terms of the trust;
(c) the adjustment or determination would reduce an amount that is permanently set
aside for a charitable purpose under the terms of the trust, unless both income and principal are
set aside for the charitable purpose;
(d) possessing or exercising the power would cause a person to be treated as the owner
of all or part of the trust for federal income tax purposes;
(e) possessing or exercising the power would cause all or part of the value of the trust
assets to be included in the gross estate of an individual for federal estate tax purposes;
(f) possessing or exercising the power would cause an individual to be treated as
making a gift for federal gift tax purposes;
(g) the fiduciary is not an independent person;
(h) the trust is irrevocable and provides for income to be paid to the settlor and
possessing or exercising the power would cause the adjusted principal or income to be
considered an available resource or available income under a public-benefit program; or
(i) the trust is a unitrust under Part 3, Unitrust.
(6) If Subsection (5)(d), (e), (f), or (g) applies to a fiduciary:
(a) a co-fiduciary to which Subsections (5)(d) through (g) do not apply may exercise
the power to adjust, unless the exercise of the power 
to adjust
 by the remaining co-fiduciary or
co-fiduciaries is not permitted by the terms of the trust or law other than this chapter; or
(b) 
(i)
 if there is no co-fiduciary to which Subsections (5)(d) through (g) do not
apply[
,
]
:
(A) except as otherwise provided in Subsection (6)(b)(ii)(A), 
 the fiduciary may appoint
a co-fiduciary to which Subsections (5)(d) through (g) do not apply[
, which may be a special
fiduciary with limited powers, and
]
;
(B) except as otherwise provided in Subsection (6)(b)(ii)(B),
 the appointed co-fiduciary
may exercise the power to adjust under Subsection (1)[
, unless the appointment of a
co-fiduciary or the exercise of the power by a co-fiduciary is not permitted by the terms of the
trust or law other than this chapter.
]
; and
(C) the appointed co-fiduciary may be a special fiduciary with limited powers.
(ii) (A) If the appointment of a co-fiduciary is not permitted by the terms of the trust or
by a provision of law outside this chapter, a fiduciary may not appoint a co-fiduciary.
(B) If the exercise of the power to adjust by a co-fiduciary is not permitted by the terms
of the trust or by a provision of law outside this chapter, the co-fiduciary may not exercise the
power to adjust under Subsection (1).
(7) A fiduciary may release or delegate to a co-fiduciary the power to adjust under
Subsection (1) if the fiduciary determines that the fiduciary's possession or exercise of the
power 
to adjust
 will or may:
(a) cause a result described in Subsections (5)(a) through (f) or (h); or
(b) deprive the trust of a tax benefit or impose a tax burden not described in
Subsections (5)(a) through (f).
(8) A fiduciary's release or delegation to a co-fiduciary under Subsection (7) of the
power to adjust under Subsection (1):
(a) must be in a record;
(b) applies to the entire power 
to adjust
, unless the release or delegation provides a
limitation, which may be a limitation to the power to adjust:
(i) from income to principal;
(ii) from principal to income;
(iii) for specified property; or
(iv) in specified circumstances;
(c) for a delegation, may be modified by a redelegation under this subsection by the
co-fiduciary to which the delegation is made; and
(d) subject to Subsection (8)(c), is permanent, unless the release or delegation provides
a specified period, including a period measured by the life of an individual or the lives of more
than one individual.
(9) Terms of a trust [
which
] 
that
 deny or limit the power to adjust between income and
principal do not affect the application of this section, unless the terms of the trust expressly
deny or limit the power to adjust under Subsection (1).
(10) The exercise of the power to adjust under Subsection (1) in any accounting period
may apply to the current 
accounting
 period, the immediately preceding 
accounting
 period, and
one or more subsequent 
accounting
 periods.
(11) A description of the exercise of the power to adjust under Subsection (1) [
must
]
shall
 be:
(a) included in a report, if any, sent to beneficiaries under Subsection 
75-7-811
(3); or
(b) communicated at least annually to the qualified beneficiaries determined under
Subsection 
75-7-103
(1)(h).
Section 6. Section 
22-3-301 (Effective 07/01/20)
 is amended to read:
22-3-301 (Effective 07/01/20).
Definitions.
In this part:
(1) "Applicable value" means the amount of the net fair market value of a trust taken
into account under Section 
22-3-307
.
(2) "Express unitrust" means a trust for which, under the terms of the trust without
regard to this part, income or net income [
must or may
] 
is permitted or required to
 be
calculated as a unitrust amount.
(3) "Income trust" means a trust that is not a unitrust.
(4) "Net fair market value of a trust" means the fair market value of the assets of the
trust[
, less
] 
minus
 the noncontingent liabilities of the trust.
(5) (a) "Unitrust" means a trust for which net income is a unitrust amount.
(b) "Unitrust" includes an express unitrust.
(6) "Unitrust amount" means:
(a) an amount computed by multiplying a determined value of a trust by a determined
percentage; and
(b) for a unitrust administered under a unitrust policy, the applicable value[
,
]
multiplied by the unitrust rate.
(7) "Unitrust policy" means a policy described in Sections 
22-3-305
 through 
22-3-309
and adopted under Section 
22-3-303
.
(8) "Unitrust rate" means the rate used to compute the unitrust amount under
Subsection (6) for a unitrust administered under a unitrust policy.
Section 7. Section 
22-3-302 (Effective 07/01/20)
 is amended to read:
22-3-302 (Effective 07/01/20).
Application -- Duties and remedies.
(1) Except as otherwise provided in Subsection (2), this part applies to:
(a) an income trust, unless the terms of the trust expressly prohibit use of this part by
:
(i)
 a specific reference to this part
;
 or
(ii)
 an explicit expression of intent that net income not be calculated as a unitrust
amount; and
(b) an express unitrust, except to the extent the terms of the trust explicitly:
(i) prohibit use of this part by a specific reference to this part;
(ii) prohibit conversion to an income trust; or
(iii) limit changes to the method of calculating the unitrust amount.
(2) This part does not apply to a trust described in Section 170(f)(2)(B), 642(c)(5),
664(d), 2702(a)(3)(A)(ii) or (iii), or 2702(b) of the Internal Revenue Code.
(3) (a) An income trust to which this part applies under Subsection (1)(a) may be
converted to a unitrust under this part regardless of the terms of the trust concerning
distributions.
(b) Conversion to a unitrust under this part does not affect other terms of the trust
concerning distributions of income or principal.
(4) (a) This part applies to an estate only to the extent a trust is a beneficiary of the
estate.
(b) To the extent of the trust's interest in the estate, 
and in the same manner as for a
trust under this part:
(i)
 the estate may be administered as a unitrust[
,
]
;
(ii)
 the administration of the estate as a unitrust may be discontinued[
,
]
;
 or
(iii)
 the percentage or method used to calculate the unitrust amount may be changed[
,
in the same manner as for a trust under this part
].
(5) This part does not create a duty to take or consider action under this part or to
inform a beneficiary about the applicability of this part.
(6) A fiduciary that in good faith takes or fails to take an action under this part is not
liable to a person affected by the action or inaction 
of the fiduciary
.
Section 8. Section 
22-3-303 (Effective 07/01/20)
 is amended to read:
22-3-303 (Effective 07/01/20).
Authority of fiduciary.
(1) A fiduciary, without court approval, by complying with Subsections (2) and (6),
may:
(a) convert an income trust to a unitrust if the fiduciary adopts
,
 in a record
,
 a unitrust
policy for the trust providing:
(i) that
,
 in administering the trust
,
 the net income of the trust will be a unitrust amount
rather than net income determined without regard to this part; and
(ii) the percentage and method used to calculate the unitrust amount;
(b) change the percentage or method used to calculate a unitrust amount for a unitrust
if the fiduciary adopts in a record a unitrust policy or an amendment or replacement of a
unitrust policy providing changes in the percentage or method used to calculate the unitrust
amount; or
(c) convert a unitrust to an income trust if the fiduciary adopts
,
 in a record
,
 a
determination that, in administering the trust, the net income of the trust will be net income
determined without regard to this part rather than a unitrust amount.
(2) A fiduciary may take an action under Subsection (1) if:
(a) the fiduciary determines that the action will assist the fiduciary to administer a trust
impartially;
(b) the fiduciary sends a notice in a record, in the manner required by Section
22-3-304
, describing and proposing to take the action;
(c) the fiduciary sends a copy of the notice under Subsection (2)(b) to each settlor of
the trust which is:
(i) if an individual, living; or
(ii) if not an individual, in existence;
(d) at least one member of each class of the qualified beneficiaries determined under
Subsection 
75-7-103
(1)(h) receiving the notice under Subsection (2)(b) is:
(i) if an individual, legally competent;
(ii) if not an individual, in existence; or
(iii) represented in the manner provided in Subsection 
22-3-304
(2); and
(e) the fiduciary does not receive, by the date specified in the notice under Subsection
22-3-304
(4)(e), an objection in a record to the action proposed under Subsection (2)(b) from a
person to which the notice under Subsection (2)(b) is sent.
(3) (a) If a fiduciary receives, not later than the date stated in the notice under
Subsection 
22-3-304
(4)(e), an objection in a record described in Subsection 
22-3-304
(4)(d) to a
proposed action, the fiduciary or a beneficiary may request 
that
 the court [
to have the proposed
action taken as proposed, taken with modifications, or prevented.
]
:
(i) require the fiduciary to take the proposed action;
(ii) require the fiduciary to take the proposed action with modifications; or
(iii) prevent the proposed action.
(b) A person described in Subsection 
22-3-304
(1) may oppose the proposed action in
the proceeding under [
this subsection,
] 
Subsection (3)(a), regardless of
 whether the person:
(i) consented under Subsection 
22-3-304
(3); or
(ii) objected under Subsection 
22-3-304
(4)(d).
(4) If, after sending a notice under Subsection (2)(b), a fiduciary decides not to take the
action proposed in the notice, the fiduciary shall notify [
in a record
] each person described in
Subsection 
22-3-304
(1) 
in a record
 of the decision not to take the action and the reasons for the
decision.
(5) If a beneficiary requests in a record that a fiduciary take an action described in
Subsection (1) and the fiduciary declines to act or does not act within 90 days after receiving
the request, the beneficiary may request the court to direct the fiduciary to take the action
requested.
(6) In deciding whether and how to take an action authorized by Subsection (1), or
whether and how to respond to a request by a beneficiary under Subsection (5), a fiduciary
shall consider all factors relevant to the trust and the beneficiaries, including 
the
 relevant
factors in Subsection 
22-3-201
(5).
(7) [
A
] 
For a reason described in Subsection 
22-3-203
(7), and in the manner described
in Subsection 
22-3-203
(8), a
 fiduciary may
:
(a)
 release or delegate the power to convert an income trust to a unitrust under
Subsection (1)(a)[
,
]
;
(b)
 change the percentage or method used to calculate a unitrust amount under
Subsection (1)(b)[
,
]
;
 or
(c)
 convert a unitrust to an income trust under Subsection (1)(c)[
, for a reason
described in Subsection 
22-3-203
(7) and in the manner described in Subsection 
22-3-203
(8)
].
Section 9. Section 
22-3-304 (Effective 07/01/20)
 is amended to read:
22-3-304 (Effective 07/01/20).
Notice.
(1) A 
fiduciary shall send a
 notice required by Subsection 
22-3-303
(2)(b) [
must be
sent
] in a manner authorized under Section 
75-7-109
 to:
(a) the qualified beneficiaries determined under Subsection 
75-7-103
(1)(h); [
and
]
[
(b) each person that is granted a power over the trust by the terms of the trust, to the
extent the power is exercisable when the person is not then serving as a trustee:
]
[
(i) including a:
]
[
(A) power over the investment, management, or distribution of trust property or other
matters of trust administration; and
]
[
(B) power to appoint or remove a trustee or person described in this subsection; and
]
[
(ii) excluding a:
]
[
(A) power of appointment;
]
[
(B) power of a beneficiary over the trust, to the extent the exercise or nonexercise of
the power affects the beneficial interest of the beneficiary or another beneficiary represented by
the beneficiary under Sections 
75-7-301
 through 
75-7-305
 with respect to the exercise or
nonexercise of the power; and
]
[
(C) power over the trust if the terms of the trust provide that the power is held in a
nonfiduciary capacity and the power must be held in a nonfiduciary capacity to achieve a tax
objective under the Internal Revenue Code.
]
(b) each person acting, in accordance with Title 75, Chapter 12, Uniform Directed
Trust Act, as trust director of the trust; and
(c) each person that is granted a power by the terms of the trust to appoint or remove a
trustee or person described in Subsection (1)(b), to the extent the power is exercisable when the
person that exercises the power is not then serving as trustee or is a person described in
Subsection (1)(b).
(2) The representation provisions of Sections 
75-7-301
 through 
75-7-305
 apply to
notice under this section.
(3) (a) A person may consent in a record at any time to action proposed under
Subsection 
22-3-303
(2)(b).
[
(b) A notice required by Subsection 
22-3-303
(2)(b) need not be sent to a person that
consents under this subsection.
]
(b) If a person required to receive a notice under Subsection (1) consents under
Subsection (3)(a) to not receive the notice, the fiduciary is not required to send the person the
notice.
(4) A notice required by Subsection 
22-3-303
(2)(b) [
must
] 
shall
 include:
(a) the action proposed under Subsection 
22-3-303
(2)(b);
(b) for a conversion of an income trust to a unitrust, a copy of the unitrust policy
adopted under Subsection 
22-3-303
(1)(a);
(c) for a change in the percentage or method used to calculate the unitrust amount, a
copy of the unitrust policy or amendment or replacement of the unitrust policy adopted under
Subsection 
22-3-303
(1)(b);
(d) a statement that the person to which the notice is sent may object to the proposed
action by stating in a record the basis for the objection and sending or delivering the record to
the fiduciary;
(e) the date by which 
the fiduciary shall receive
 an objection under Subsection (4)(d)
[
must be received by the fiduciary, which must
]
, which shall
 be at least 30 days after the date
the notice is sent;
(f) the date on which the action is proposed to be taken and the date on which the
action is proposed to take effect;
(g) the name and contact information of the fiduciary; and
(h) the name and contact information of a person that may be contacted for additional
information.
Section 10. Section 
22-3-305 (Effective 07/01/20)
 is amended to read:
22-3-305 (Effective 07/01/20).
Unitrust policy.
(1) In administering a unitrust under this part, a fiduciary shall follow a unitrust policy
:
(a)
 adopted under Subsection 
22-3-303
(1)(a) or (b)
;
 or
(b)
 amended or replaced under Subsection 
22-3-303
(1)(b).
(2) A unitrust policy [
must
] 
shall
 provide:
(a) the unitrust rate or the method for determining the unitrust rate under Section
22-3-306
;
(b) the method for determining the applicable value under Section 
22-3-307
; and
(c) the rules described in Sections 
22-3-306
 through 
22-3-309
 [
which
] 
that
 apply in the
administration of the unitrust, [
whether
] 
regardless of whether
 the rules are:
(i) mandatory, as provided in Subsections 
22-3-307
(1) and 
22-3-308
(1); or
(ii) optional, as provided in Section 
22-3-306
 and Subsections 
22-3-307
(2),
22-3-308
(2), and 
22-3-309
(1), to the extent the fiduciary elects to adopt those rules.
Section 11. Section 
22-3-307 (Effective 07/01/20)
 is amended to read:
22-3-307 (Effective 07/01/20).
Applicable value.
(1) A unitrust policy [
must
] 
shall
 provide the method for determining the fair market
value of an asset for the purpose of determining the unitrust amount, including:
(a) the frequency of valuing the asset, which need not require a valuation in every
period; and
(b) the date for valuing the asset in each period [
in which
] 
that
 the asset is valued.
(2) Except as otherwise provided in Subsection 
22-3-309
(2)(b), a unitrust policy may
provide methods for determining the amount of the net fair market value of the trust to take
into account in determining the applicable value, including:
(a) obtaining an appraisal of an asset for which fair market value is not readily
available;
(b) exclusion of specific assets or groups or types of assets;
(c) other exceptions or modifications of the treatment of specific assets or groups or
types of assets;
(d) identification and treatment of cash or property held for distribution;
(e) use of:
(i) an average of fair market values over a stated number of preceding periods; or
(ii) another mathematical blend of fair market values over a stated number of preceding
periods;
(f) a limit on how much the applicable value of all assets, groups of assets, or
individual assets may increase over:
(i) the corresponding applicable value for the preceding period; or
(ii) a mathematical blend of applicable values over a stated number of preceding 
time
periods;
(g) a limit on how much the applicable value of all assets, groups of assets, or
individual assets may decrease below:
(i) the corresponding applicable value for the preceding period; or
(ii) a mathematical blend of applicable values over a stated number of preceding
periods;
(h) the treatment of accrued income and other features of an asset [
which
] 
that
 affect
value; and
(i) determining the liabilities of the trust, including treatment of liabilities to conform
with the treatment of assets under Subsections (2)(a) through (h).
Section 12. Section 
22-3-308 (Effective 07/01/20)
 is amended to read:
22-3-308 (Effective 07/01/20).
Period.
(1) (a) A unitrust policy [
must
] 
shall
 provide the period used under Sections 
22-3-306
and 
22-3-307
.
(b) Except as otherwise provided in Subsection 
22-3-309
(2)(c), the period may be:
(i) a calendar year;
(ii) a 12-month period other than a calendar year;
(iii) a calendar quarter;
(iv) a three-month period other than a calendar quarter; or
(v) another period.
(2) Except as otherwise provided in Subsection 
22-3-309
(2), a unitrust policy may
provide standards for:
(a) using fewer preceding periods under Subsection 
22-3-306
(1)(b)(ii), (2)(c), or (2)(d)
if:
(i) the trust was not in existence in a preceding period; or
(ii) market indices or other published data are not available for a preceding period;
(b) using fewer preceding periods under Subsection 
22-3-307
(2)(e)(i) or (ii), (f)(ii), or
(g)(ii) if:
(i) the trust was not in existence in a preceding period; or
(ii) fair market values are not available for a preceding period; and
(c) prorating the unitrust amount on a daily basis for a part of a period in which the
trust or the administration of the trust as a unitrust or the interest of any beneficiary commences
or terminates.
Section 13. Section 
22-3-309 (Effective 07/01/20)
 is amended to read:
22-3-309 (Effective 07/01/20).
Special tax benefits -- Other rules.
(1) A unitrust policy may:
(a) provide methods and standards for:
(i) determining the timing of distributions;
(ii) making distributions in cash or in kind or partly in cash and partly in kind; or
(iii) correcting an underpayment or overpayment to a beneficiary based on the unitrust
amount if there is an error in calculating the unitrust amount;
(b) specify sources and the order of sources, including categories of income for federal
income tax purposes, from which distributions of a unitrust amount are paid; or
(c) provide other standards and rules the fiduciary determines serve the interests of the
beneficiaries.
(2) If a trust qualifies for a special tax benefit or a fiduciary is not an independent
person:
(a) the unitrust rate established under Section 
22-3-306
 may not be less than 3% or
more than 5%;
(b) the only provisions of Section 
22-3-307
 [
which
] 
that
 apply are Subsections
22-3-307
(1) and (2)(a), (d), (e)(i), and (i);
(c) the only period that may be used under Section 
22-3-308
 is a calendar year under
Subsection 
22-3-308
(1); and
(d) the only other provisions of Section 
22-3-308
 that apply are Subsection
22-3-308
(2)(b)(i) and (c).
Section 14. Section 
22-3-401 (Effective 07/01/20)
 is amended to read:
22-3-401 (Effective 07/01/20).
Receipts from entity -- Character of receipts from
entity.
(1) In this section:
(a) "Capital distribution" means an entity distribution of money [
which
] 
that
 is a:
(i) return of capital; or
(ii) distribution in total or partial liquidation of the entity.
(b) (i) "Entity" means a corporation, partnership, limited liability company, regulated
investment company, real estate investment trust, common trust fund, or any other organization
or arrangement in which a fiduciary owns or holds an interest, [
whether or not
] 
regardless of
whether
 the entity is a taxpayer for federal income tax purposes.
(ii) "Entity" does not include:
(A) a trust or estate to which Section 
22-3-402
 applies;
(B) a business or other activity to which Section 
22-3-403
 applies that is not conducted
by an entity described in Subsection (1)(b)(i);
(C) an asset-backed security; or
(D) an instrument or arrangement to which Section 
22-3-416
 applies.
(c) "Entity distribution" means a payment or transfer by an entity made to a person in
the person's capacity as an owner or holder of an interest in the entity.
(2) In this section, an attribute or action of an entity includes an attribute or action of
any other entity in which the entity owns or holds an interest, including an interest owned or
held indirectly through another entity.
(3) Except as otherwise provided in Subsections (4)(b) through (d), a fiduciary shall
allocate to income:
(a) money received in an entity distribution; and
(b) tangible personal property of nominal value received from the entity.
(4) A fiduciary shall allocate to principal:
(a) property received in an entity distribution [
which
] 
that
 is not:
(i) money; or
(ii) tangible personal property of nominal value;
(b) money received in an entity distribution in an exchange for part or all of the
fiduciary's interest in the entity, to the extent the entity distribution reduces the fiduciary's
interest in the entity relative to the interests of other persons that own or hold interests in the
entity;
(c) money received in an entity distribution that the fiduciary determines or estimates is
a capital distribution; and
(d) money received in an entity distribution from an entity that is:
(i) a regulated investment company or real estate investment trust if the money
received is a capital gain dividend for federal income tax purposes; or
(ii) treated for federal income tax purposes [
comparably
] 
in a comparable manner
 to
the treatment described in Subsection (4)(d)(i).
(5) A fiduciary may determine or estimate that money received in an entity distribution
is a capital distribution:
(a) by relying without inquiry or investigation on a characterization of the entity
distribution provided by or on behalf of the entity, unless the fiduciary:
(i) determines, on the basis of information known to the fiduciary, that the
characterization is or may be incorrect; or
(ii) owns or holds more than 50% of the voting interest in the entity;
(b) by determining or estimating, on the basis of information known to the fiduciary or
provided to the fiduciary by or on behalf of the entity, that the total amount of money and
property received by the fiduciary in the entity distribution or a series of related entity
distributions is or will be greater than 20% of the fair market value of the fiduciary's interest in
the entity; or
(c) if neither Subsection (5)(a) nor (b) applies, by considering the factors in Subsection
(6) and the information known to the fiduciary or provided to the fiduciary by or on behalf of
the entity.
(6) In making a determination or estimate under Subsection (5)(c), a fiduciary may
consider:
(a) a characterization of an entity distribution provided by or on behalf of the entity;
(b) the amount of money or property received in:
(i) the entity distribution; or
(ii) what the fiduciary determines is or will be a series of related entity distributions;
(c) the amount described in Subsection (6)(b) compared to the amount 
that
 the
fiduciary determines or estimates is, during the current or preceding accounting periods:
(i) the entity's operating income;
(ii) the proceeds of the entity's sale or other disposition of:
(A) all or part of the business or other activity conducted by the entity;
(B) one or more business assets that are not sold to customers in the ordinary course of
the business or other activity conducted by the entity; or
(C) one or more assets other than business assets, unless the entity's primary activity is
to invest in assets to realize gain on the disposition of all or some of the assets;
(iii) if the entity's primary activity is to invest in assets to realize gain on the disposition
of all or some of the assets, the gain realized on the disposition;
(iv) the entity's regular, periodic entity distributions;
(v) the amount of money 
that
 the entity has accumulated;
(vi) the amount of money 
that
 the entity has borrowed;
(vii) the amount of money 
that
 the entity has received from the sources described in
Sections 
22-3-407
, 
22-3-410
, 
22-3-411
, and 
22-3-412
; and
(viii) the amount of money 
that
 the entity has received from a source not otherwise
described in this subsection; and
(d) any other factor the fiduciary determines is relevant.
(7) If, after applying Subsections (3) through (6), a fiduciary determines that a part of
an entity distribution is a capital distribution but 
the fiduciary
 is in doubt about the amount of
the entity distribution [
which
] 
that
 is a capital distribution, the fiduciary shall allocate to
principal the amount of the entity distribution [
which
] 
that
 is in doubt.
(8) If a fiduciary receives additional information about the application of this section to
an entity distribution before the fiduciary has paid part of the entity distribution to a
beneficiary, the fiduciary may consider the additional information before making the payment
to the beneficiary and may change a decision to make the payment to the beneficiary.
(9) If a fiduciary receives additional information about the application of this section to
an entity distribution after the fiduciary has paid part of the entity distribution to a beneficiary,
the fiduciary is not required to change or recover the payment to the beneficiary but may
consider that information in determining whether to exercise the power to adjust under Section
22-3-203
.
Section 15. Section 
22-3-402 (Effective 07/01/20)
 is amended to read:
22-3-402 (Effective 07/01/20).
Receipts from entity -- Distribution from trust or
estate.
(1) A fiduciary shall allocate
:
(a)
 to income an amount received as a distribution of income, including a unitrust
distribution under Part 3, Unitrust, from a trust or estate in which the fiduciary has an interest,
other than an interest the fiduciary purchased in a trust that is an investment entity[
, and shall
allocate
]
; and
(b)
 to principal an amount received as a distribution of principal from the trust or
estate.
(2) If a fiduciary purchases, or receives from a settlor, an interest in a trust that is an
investment entity, Section 
22-3-401
, 
22-3-415
, or 
22-3-416
 applies to a receipt from the trust.
Section 16. Section 
22-3-403 (Effective 07/01/20)
 is amended to read:
22-3-403 (Effective 07/01/20).
Receipts from entity -- Business or other activity
conducted by fiduciary.
(1) This section applies to a business or other activity conducted by a fiduciary if the
fiduciary determines that it is in the interests of the beneficiaries to account separately for the
business or other activity instead of:
(a) accounting for the business or other activity as part of the fiduciary's general
accounting records; or
(b) conducting the business or other activity through an entity described in Subsection
22-3-401
(1)(b)(i).
(2) A fiduciary may account separately under this section for the transactions of a
business or other activity, whether or not assets of the business or other activity are segregated
from other assets held by the fiduciary.
(3) A fiduciary that accounts separately under this section for a business or other
activity:
(a) may determine:
(i) the extent to which the net cash receipts of the business or other activity [
must
] 
shall
be retained for:
(A) working capital;
(B) the acquisition or replacement of fixed assets; and
(C) other reasonably foreseeable needs of the business or other activity; and
(ii) the extent [
to which
] 
that
 the remaining net cash receipts are accounted for as
principal or income in the fiduciary's general accounting records for the trust;
(b) may make a determination under Subsection (3)(a) separately and differently from
the fiduciary's decisions concerning distributions of income or principal; and
(c) shall account for the net amount received from the sale of an asset of the business
or other activity, other than a sale in the ordinary course of the business or other activity, as
principal in the fiduciary's general accounting records for the trust, to the extent the fiduciary
determines that the net amount received is no longer required in the conduct of the business or
other activity.
(4) [
Activities for which a
] 
A
 fiduciary may account separately under this section
[
include
] 
for activities that include
:
(a) retail, manufacturing, service, and other traditional business activities;
(b) farming;
(c) raising and selling livestock and other animals;
(d) managing rental properties;
(e) extracting minerals, water, and other natural resources;
(f) growing and cutting timber;
(g) an activity to which Section 
22-3-414
, 
22-3-415
, or 
22-3-416
 applies; and
(h) any other business conducted by the fiduciary.
Section 17. Section 
22-3-404 (Effective 07/01/20)
 is amended to read:
22-3-404 (Effective 07/01/20).
Receipts not normally apportioned -- Principal
receipts.
A fiduciary shall allocate to principal:
(1) to the extent not allocated to income under this chapter, an asset received from:
(a) an individual during the individual's lifetime;
(b) an estate;
(c) a trust on termination of an income interest; or
(d) a payor under a contract naming the fiduciary as beneficiary;
(2) except as otherwise provided in this part, money or other property received from
the sale, exchange, liquidation, or change in form of a principal asset;
(3) an amount recovered from a third party to reimburse the fiduciary because of a
disbursement described in Subsection 
22-3-502
(1) or for another reason to the extent not based
on loss of income;
(4) proceeds of property taken by eminent domain, except that proceeds awarded for
loss of income in an accounting period are income if a current income beneficiary had a
mandatory income interest during the 
accounting
 period;
(5) net income received in an accounting period during which there is no beneficiary to
which a fiduciary [
may or must
] 
is permitted or required to
 distribute income; and
(6) other receipts as provided in Part 3, Unitrust.
Section 18. Section 
22-3-405 (Effective 07/01/20)
 is amended to read:
22-3-405 (Effective 07/01/20).
Receipts not normally apportioned -- Rental
property.
(1) To the extent a fiduciary does not account for the management of rental property as
a business under Section 
22-3-403
, the fiduciary shall allocate to income an amount received as
rent of real or personal property, including an amount received for cancellation or renewal of a
lease.
(2) An amount received as a refundable deposit, including a security deposit or a
deposit that is to be applied as rent for future periods:
(a) [
must
] 
shall
 be added to principal and held subject to the terms of the lease, except
as otherwise provided by law other than this chapter; and
(b) is not allocated to income or available for distribution to a beneficiary until the
fiduciary's contractual obligations have been satisfied with respect to that amount.
Section 19. Section 
22-3-407 (Effective 07/01/20)
 is amended to read:
22-3-407 (Effective 07/01/20).
Receipts not normally apportioned -- Insurance
policy or contract.
(1) This section does not apply to a contract to which Section 
22-3-409
 applies.
(2) (a) Except as otherwise provided in Subsection (3), a fiduciary shall allocate to
principal the proceeds of a life insurance policy or other contract received by the fiduciary as
beneficiary, including a contract that insures against damage to, destruction of, or loss of title to
an asset.
(b) The fiduciary shall allocate dividends on an insurance policy
:
(i)
 to income
,
 to the extent premiums on the policy are paid from income
;
 and
(ii)
 to principal
,
 to the extent premiums on the policy are paid from principal.
(3) A fiduciary shall allocate to income proceeds of a contract that insures the fiduciary
against loss of:
(a) occupancy or other use by a current income beneficiary;
(b) income; or
(c) subject to Section 
22-3-403
, profits from a business.
Section 20. Section 
22-3-409 (Effective 07/01/20)
 is amended to read:
22-3-409 (Effective 07/01/20).
Receipts normally apportioned -- Deferred
compensation, annuity, or similar payment.
(1) In this section:
(a) "Internal income of a separate fund" means the amount determined under
Subsection (2).
(b) "Marital trust" means a trust:
(i) of which the settlor's surviving spouse is the only current income beneficiary and is
entitled to a distribution of all the current net income of the trust; and
(ii) that qualifies for a marital deduction with respect to the settlor's estate under
Section 2056 of the Internal Revenue Code because:
(A) an election to qualify for a marital deduction under Section 2056(b)(7) of the
Internal Revenue Code has been made; or
(B) the trust qualifies for a marital deduction under Section 2056(b)(5) of the Internal
Revenue Code.
(c) (i) "Payment" means an amount 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 payor in exchange for future amounts the fiduciary may receive.
(ii) "Payment" includes an amount received in money or property from the payor's
general assets or from a separate fund created by the payor.
(d) "Separate fund" includes a private or commercial annuity, an individual retirement
account, and a pension, profit-sharing, stock-bonus, or stock-ownership plan.
(2) For each accounting period, [
the following rules apply to a
] 
and for each
 separate
fund:
(a) the fiduciary shall determine the internal income of the separate fund as if the
separate fund were a trust subject to this chapter;
(b) if the fiduciary cannot determine the internal income of the separate fund under
Subsection (2)(a), the internal income of the separate fund is deemed to equal 3% of the value
of the separate fund, according to the most recent statement of value preceding the beginning of
the accounting period; and
(c) if the fiduciary cannot determine the value of the separate fund under Subsection
(2)(b), the value of the separate fund is deemed to equal the present value of the expected
future payments, as determined under Section 7520 of the Internal Revenue Code, for the
month preceding the beginning of the accounting period for which the computation is made.
(3) A fiduciary shall allocate a payment received from a separate fund during an
accounting period to income, to the extent of the internal income of the separate fund during
the 
accounting
 period, and the balance to principal.
(4) The fiduciary of a marital trust shall:
(a) withdraw from a separate fund the amount the current income beneficiary of the
trust requests the fiduciary to withdraw, not greater than the amount by which the internal
income of the separate fund during the accounting period exceeds the amount the fiduciary
otherwise receives from the separate fund during the 
accounting
 period;
(b) transfer from principal to income the amount the current income beneficiary
requests the fiduciary to transfer, not greater than the amount by which the internal income of
the separate fund during the 
accounting
 period exceeds the amount the fiduciary receives from
the separate fund during the 
accounting
 period after the application of Subsection (4)(a); and
(c) distribute to the current income beneficiary as income:
(i) the amount of the internal income of the separate fund received or withdrawn during
the 
accounting
 period; and
(ii) the amount transferred from principal to income under Subsection (4)(b).
(5) For a trust, other than a marital trust, of which one or more current income
beneficiaries are entitled to a distribution of all the current net income, the fiduciary shall
transfer from principal to income the amount by which the internal income of a separate fund
during the accounting period exceeds the amount the fiduciary receives from the separate fund
during the 
accounting
 period.
Section 21. Section 
22-3-411 (Effective 07/01/20)
 is amended to read:
22-3-411 (Effective 07/01/20).
Receipts normally apportioned -- Minerals, water,
and other natural resources.
(1) To the extent 
that
 a fiduciary does not account for a receipt from an interest in
minerals, water, or other natural resources as a business under Section 
22-3-403
, the fiduciary
shall allocate the receipt:
(a) to income, to the extent received:
(i) as delay rental or annual rent on a lease;
(ii) as a factor for interest or the equivalent of interest under an agreement creating a
production payment; or
(iii) on account of an interest in renewable water;
(b) to principal, if received from a production payment, to the extent 
that
 Subsection
(1)(a)(ii) does not apply; or
(c) between income and principal equitably, to the extent received:
(i) on account of an interest in nonrenewable water;
(ii) as a royalty, shut-in-well payment, take-or-pay payment, or bonus; or
(iii) from a working interest or any other interest not provided for in Subsection (1)(a)
or (b) or Subsection (1)(c)(i) or (ii).
(2) This section applies to an interest owned or held by a fiduciary [
whether or not
]
regardless of whether
 a settlor was extracting minerals, water, or other natural resources before
the fiduciary owned or held the interest.
(3) An allocation of a receipt under Subsection (1)(c) is presumed to be equitable if the
amount allocated to principal is equal to the amount allowed by the Internal Revenue Code as a
deduction for depletion of the interest.
(4) (a) If a fiduciary owns or holds an interest in minerals, water, or other natural
resources before July 1, [
] 
, the fiduciary may allocate receipts from the interest as
provided in this section or in the manner used by the fiduciary before July 1, [
] 
.
(b) If the fiduciary acquires an interest in minerals, water, or other natural resources on
or after July 1, [
] 
, the fiduciary shall allocate receipts from the interest as provided in
this section.
Section 22. Section 
22-3-412 (Effective 07/01/20)
 is amended to read:
22-3-412 (Effective 07/01/20).
Receipts normally apportioned -- Timber.
(1) To the extent 
that
 a fiduciary does not account for receipts from the sale of timber
and related products as a business under Section 
22-3-403
, the fiduciary shall allocate the net
receipts:
(a) to income, to the extent 
that
 the amount of timber cut from the land does not exceed
the rate of growth of the timber;
(b) to principal, to the extent 
that
 the amount of timber cut from the land exceeds the
rate of growth of the timber or the net receipts are from the sale of standing timber;
(c) between income and principal if the net receipts are from the lease of land used for
growing and cutting timber or from a contract to cut timber from land, by determining the
amount of timber cut from the land under the lease or contract and applying the rules in
Subsections (1)(a) and (b); or
(d) to principal, to the extent 
that
 advance payments, bonuses, and other payments are
not allocated under Subsection (1)(a), (b), or (c).
(2) In determining net receipts to be allocated under Subsection (1), a fiduciary shall
deduct and transfer to principal a reasonable amount for depletion.
(3) This section applies to land owned or held by a fiduciary [
whether or not
]
regardless of whether
 a settlor was cutting timber from the land before the fiduciary owned or
held the property.
(4) (a) If a fiduciary owns or holds an interest in land used for growing and cutting
timber before July 1, [
] 
, the fiduciary may allocate net receipts from the sale of
timber and related products as provided in this section or in the manner used by the fiduciary
before July 1, [
] 
.
(b) If the fiduciary acquires an interest in land used for growing and cutting timber on
or after July 1, [
] 
, the fiduciary shall allocate net receipts from the sale of timber and
related products as provided in this section.
Section 23. Section 
22-3-414 (Effective 07/01/20)
 is amended to read:
22-3-414 (Effective 07/01/20).
Receipts normally apportioned -- Derivative or
option.
(1) In this section:
(a) "Derivative" means a contract, instrument, other arrangement, or combination of
contracts, instruments, or other arrangements, 
for which
 the value, rights, and obligations [
of
which
] are, in whole or in part, dependent on or derived from an underlying tangible or
intangible asset, group of tangible or intangible assets, index, or occurrence of an event.
(b) "Derivative" includes stocks, fixed income securities, and financial instruments and
arrangements based on indices, commodities, interest rates, weather-related events, and
credit-default events.
(2) To the extent 
that
 a fiduciary does not account for a transaction in derivatives as a
business under Section 
22-3-403
, the fiduciary shall allocate
:
(a)
 10% of receipts from the transaction and 10% of disbursements made in connection
with the transaction to income
;
 and
(b)
 the balance to principal.
(3) Subsection (4) applies if:
(a) a fiduciary:
(i) grants an option to buy property from a trust, [
whether or not
] 
regardless of whether
the trust owns the property when the option is granted;
(ii) grants an option that permits another person to sell property to the trust; or
(iii) acquires an option to buy property for the trust or an option to sell an asset owned
by the trust; and
(b) the fiduciary or other owner of the asset is required to deliver the asset if the option
is exercised.
(4) If this subsection applies, the fiduciary shall allocate 10% to income and the
balance to principal of the following amounts:
(a) an amount received for granting the option;
(b) an amount paid to acquire the option; and
(c) gain or loss realized on the exercise, exchange, settlement, offset, closing, or
expiration of the option.
Section 24. Section 
22-3-415 (Effective 07/01/20)
 is amended to read:
22-3-415 (Effective 07/01/20).
Receipts normally apportioned -- Asset-backed
security.
(1) Except as otherwise provided in Subsection (2), a fiduciary shall allocate
:
(a)
 to income
,
 a receipt from or related to an asset-backed security, to the extent 
that
the payor identifies the payment as being from interest or other current return[
,
]
;
 and
(b)
 to principal
,
 the balance of the receipt.
(2) If a fiduciary receives one or more payments in exchange for part or all of the
fiduciary's interest in an asset-backed security, including a liquidation or redemption of the
fiduciary's interest in the security, the fiduciary shall allocate
:
(a)
 to income
,
 10% of receipts from the transaction and 10% of disbursements made in
connection with the transaction[
,
]
;
 and
(b)
 to principal
,
 the balance of the receipts and disbursements.
Section 25. Section 
22-3-505 (Effective 07/01/20)
 is amended to read:
22-3-505 (Effective 07/01/20).
Reimbursement of principal from income.
(1) If a fiduciary makes or expects to make a principal disbursement described in
Subsection (2), the fiduciary may transfer an appropriate amount from income to principal in
one or more accounting periods to reimburse principal or provide a reserve for future principal
disbursements.
(2) To the extent 
that
 a fiduciary has not been and does not expect to be reimbursed by
a third party, principal disbursements to which Subsection (1) applies include:
(a) an amount chargeable to income but paid from principal because income is not
sufficient;
(b) the cost of an improvement to principal, 
regardless of
 whether 
the improvement is
 a
change to an existing asset or the construction of a new asset, including a special assessment;
(c) a disbursement made to prepare property for rental, including tenant allowances,
leasehold improvements, and commissions;
(d) a periodic payment on an obligation secured by a principal asset, to the extent 
that
the amount transferred from income to principal for depreciation is less than the periodic
payment; and
(e) a disbursement described in Subsection 
22-3-502
(1).
(3) If an asset whose ownership gives rise to a principal disbursement becomes subject
to a successive interest after an income interest ends, the fiduciary may continue to make
transfers under Subsection (1).
Section 26. Section 
22-3-506 (Effective 07/01/20)
 is amended to read:
22-3-506 (Effective 07/01/20).
Income taxes.
(1) A tax required to be paid by a fiduciary that is based on receipts allocated to income
[
must
] 
shall
 be paid from income.
(2) A tax required to be paid by a fiduciary that is based on receipts allocated to
principal [
must
] 
shall
 be paid from principal, even if the tax is called an income tax by the
taxing authority.
(3) Subject to Subsection (4) and Sections 
22-3-504
, 
22-3-505
, and 
22-3-507
, a tax
required to be paid by a fiduciary on a share of an entity's taxable income in an accounting
period [
must
] 
shall
 be paid from:
(a) income and principal proportionately to the allocation between income and
principal of receipts from the entity in the period; and
(b) principal
,
 to the extent 
that
 the tax exceeds the receipts from the entity in the
accounting
 period.
(4) After applying Subsections (1) through (3), a fiduciary shall adjust income or
principal receipts, to the extent 
that
 the taxes the fiduciary pays are reduced because of a
deduction for a payment made to a beneficiary.
Section 27. Section 
22-3-507 (Effective 07/01/20)
 is amended to read:
22-3-507 (Effective 07/01/20).
Adjustment between income and principal because
of taxes.
(1) A fiduciary may make an adjustment between income and principal to offset the
shifting of economic interests or tax benefits between current income beneficiaries and
successor beneficiaries that arises from:
(a) an election or decision the fiduciary makes regarding a tax matter, other than a
decision to claim an income tax deduction to which Subsection (2) applies;
(b) an income tax or other tax imposed on the fiduciary or a beneficiary as a result of a
transaction involving the fiduciary or a distribution by the fiduciary; or
(c) ownership by the fiduciary of an interest in an entity
,
 a part of whose taxable
income, [
whether or not
] 
regardless of whether the taxable income is
 distributed, is includable
in the taxable income of the fiduciary or a beneficiary.
(2) (a) If the amount of an estate tax marital or charitable deduction is reduced because
a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting
[
it
] 
the amount
 for estate tax purposes and, as a result, estate taxes paid from principal are
increased and income taxes paid by the fiduciary or a beneficiary are decreased, the fiduciary
shall charge each beneficiary that benefits from the decrease in income tax to reimburse the
principal from which the increase in estate tax is paid.
(b) The total reimbursement must equal the increase in the estate tax, to the extent 
that
the principal used to pay the increase would have qualified for a marital or charitable deduction
but for the payment.
(c) The share of the reimbursement for each fiduciary or beneficiary whose income
taxes are reduced [
must
] 
shall
 be the same as [
its
] 
the fiduciary's or beneficiary's
 share of the
total decrease in income tax.
(3) A fiduciary that charges a beneficiary under Subsection (2) may offset the charge
by obtaining payment from the beneficiary, withholding an amount from future distributions to
the beneficiary, or adopting another method or combination of methods.
Section 28. Section 
22-3-601 (Effective 07/01/20)
 is amended to read:
22-3-601 (Effective 07/01/20).
Determination and distribution of net income.
(1) This section applies when:
(a) the death of an individual results in the creation of an estate or trust; or
(b) an income interest in a trust terminates, 
regardless of
 whether the trust continues or
is distributed.
(2) A fiduciary of an estate or trust with an income interest that terminates shall:
(a) determine, [
under
] 
in accordance with
 Subsection [
(7)
] 
(8)
 and Part 4, Allocation of
Receipts, Part 5, Allocation of Disbursements, and Part 7, Apportionment at Beginning and
End of Income Interest, the amount of net income and net principal receipts received from
property specifically given to a beneficiary; and
(b) distribute the net income and net principal receipts to the beneficiary that is to
receive the specific property.
(3) [
A
] 
Subject to Subsection (4), a
 fiduciary shall determine the income and net
income of an estate or income interest in a trust that terminates, other than the amount of net
income determined [
under
] 
in accordance with
 Subsection (2), [
under
] 
and in accordance with
Part 4, Allocation of Receipts, Part 5, Allocation of Disbursements, and Part 7, Apportionment
at Beginning and End of Income Interest, and by:
(a) including in net income all income from property used or sold to discharge
liabilities;
(b) paying from income or principal, in the fiduciary's discretion[
,
]
:
(i)
 fees of attorneys, accountants, and fiduciaries[
,
]
;
(ii)
 court costs and other expenses of administration[
, and
]
;
(iii)
 interest on estate [
and
] 
taxes,
 inheritance taxes
,
 and other taxes imposed because
of the decedent's death[
, but the fiduciary may pay the expenses from income of property
passing to a trust for which the fiduciary claims a federal estate tax marital or charitable
deduction only to the extent:
]
; and
[
(i) the payment of the expenses from income will not cause the reduction or loss of the
deduction; or
]
[
(ii) the fiduciary makes an adjustment under Subsection 
22-3-507
(2); and
]
(c) paying from principal other disbursements made or incurred in connection with the
settlement of the estate or the winding up of an income interest that terminates, including:
(i) to the extent authorized by the decedent's will, the terms of the trust, or applicable
law, debts, funeral expenses, disposition of remains, family allowances, estate and inheritance
taxes, and other taxes imposed because of the decedent's death; and
(ii) related penalties that are apportioned, by the decedent's will, the terms of the trust,
or applicable law, to the estate or income interest that terminates.
(4) A fiduciary may pay the expenses from income of property passing to a trust for
which the fiduciary claims a federal estate tax marital or charitable deduction only to the
extent:
(a) the payment of the expenses from income will not cause the reduction or loss of the
deduction; or
(b) the fiduciary makes an adjustment under Subsection 
22-3-507
(2).
[
(4)
] 
(5)
 If a decedent's will, the terms of a trust, or applicable law provides for the
payment of interest or the equivalent of interest to a beneficiary that receives a pecuniary
amount outright, the fiduciary shall make the payment from net income determined under
Subsection (3) or from principal to the extent 
that
 net income is insufficient.
[
(5)
] 
(6)
 If a beneficiary is to receive a pecuniary amount outright from a trust after an
income interest ends because of an income beneficiary's death, and no payment of interest or
the equivalent of interest is provided for by the terms of the trust or applicable law, the
fiduciary shall pay the interest or the equivalent of interest to which the beneficiary would be
entitled under applicable law if the pecuniary amount were required to be paid under a will.
[
(6)
] 
(7)
 A fiduciary shall distribute net income remaining after payments required by
Subsections [
(4)
] 
(5)
 and [
(5)
] 
(6)
 in the manner described in Section 
22-3-602
 to all other
beneficiaries, including a beneficiary that 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.
[
(7)
] 
(8)
 (a) A fiduciary may not reduce principal or income receipts from property
described in Subsection (2) because of a payment described in Section 
22-3-501
 or 
22-3-502
,
to the extent the decedent's 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 the fiduciary recovers
or expects to recover the payment from a third party.
(b) The net income and principal receipts from the property [
must
] 
shall
 be determined
by including the amount the fiduciary receives or pays regarding the property, whether the
amount accrued or became due before, on, or after the date of the decedent's death or an
income interest's terminating event, and making a reasonable provision for an amount the estate
or income interest may become obligated to pay after the property is distributed.
Section 29. Section 
22-3-602 (Effective 07/01/20)
 is amended to read:
22-3-602 (Effective 07/01/20).
Distribution to successor beneficiary.
(1) (a) Except to the extent Part 3, Unitrust, applies for a beneficiary that is a trust, each
beneficiary described in Subsection 
22-3-601
(6) is entitled to receive a share of the net income
equal to the beneficiary's fractional interest in undistributed principal assets, using values 
of the
undistributed principal assets
 as of the distribution date.
(b) If a fiduciary makes more than one distribution of assets to beneficiaries to which
this section applies, each beneficiary, including a beneficiary that does not receive part of the
distribution, is entitled, as of each distribution date, to a share of the net income the fiduciary
received after the decedent's death, an income interest's other terminating event, or the
preceding distribution by the fiduciary.
(2) In determining a beneficiary's share of net income under Subsection (1)[
, the
following rules apply
]:
(a) [
The
] 
the
 beneficiary is entitled to receive a share of the net income equal to the
beneficiary's fractional interest in the undistributed principal assets immediately before the
distribution date[
.
]
;
(b) [
The
] 
the
 beneficiary's fractional interest under Subsection (2)(a) [
must
] 
shall
 be
calculated:
(i) on the aggregate value of the assets as of the distribution date without reducing the
value by any unpaid principal obligation; and
(ii) without regard to:
(A) property specifically given to a beneficiary under the decedent's will or the terms of
the trust; and
(B) property required to pay pecuniary amounts not in trust[
.
]
; and
(c) [
The
] 
the
 distribution date under Subsection (2)(a) may be the date [
as of
] 
on
 which
the fiduciary calculates the value of the assets if that date is reasonably near the date on which
the assets are distributed.
(3) To the extent 
that
 a fiduciary does not distribute under this section all the collected
but undistributed net income to each beneficiary [
as of
] 
on or before
 a distribution date, the
fiduciary shall maintain records showing the interest of each beneficiary in the net income.
(4) If this section applies to income from an asset, a fiduciary may apply [
the rules in
this section
] 
Subsection (2)
 to net gain or loss realized from the disposition of the asset after
the decedent's death, an income interest's terminating event, or the preceding distribution by the
fiduciary.
Section 30. Section 
22-3-701 (Effective 07/01/20)
 is amended to read:
22-3-701 (Effective 07/01/20).
When right to income begins and ends.
(1) (a) An income beneficiary is entitled to net income in accordance with the terms of
the trust from the date 
on which
 an income interest begins.
(b) The income interest begins on the date 
that is
 specified in the terms of the trust or,
if no date is specified, on the date an asset becomes subject to:
(i) the trust for the current income beneficiary; or
(ii) a successive interest for a successor beneficiary.
(2) An asset becomes subject to a trust under Subsection (1)(b)(i):
(a) for an asset that is transferred to the trust during the settlor's life, on the date the
asset is transferred;
(b) for an asset that becomes subject to the trust because of a decedent's death, on the
date of the decedent's death, even if there is an intervening period of administration of the
decedent's estate; or
(c) for an asset that is transferred to a fiduciary by a third party because of a decedent's
death, on the date of the decedent's death.
(3) An asset becomes subject to a successive interest under Subsection (1)(b)(ii) on the
day after the preceding income interest ends, as determined under Subsection (4), even if there
is an intervening period of administration to wind up the preceding income interest.
(4) An income interest ends on the day before an income beneficiary dies or another
terminating event occurs or on the last day of a period during which there is no beneficiary to
which a fiduciary [
may or must
] 
is permitted or required to 
 distribute income.
Section 31. Section 
22-3-702 (Effective 07/01/20)
 is amended to read:
22-3-702 (Effective 07/01/20).
Apportionment of receipts and disbursements
when decedent dies or income interest begins.
(1) A fiduciary shall allocate an income receipt or disbursement, other than a receipt to
which Subsection 
22-3-601
(2) applies, to principal if [
its
] 
the
 due date 
of the income receipt or
disbursement
 occurs before the date on which:
(a) for an estate, the decedent died; or
(b) for a trust or successive interest, an income interest begins.
(2) If the due date of a periodic income receipt or disbursement occurs on or after the
date on which a decedent died or an income interest begins, a fiduciary shall allocate the
receipt or disbursement to income.
(3) If an income receipt or disbursement is not periodic or has no due date, a fiduciary
shall:
(a) treat the receipt or disbursement under this section as accruing from day to day; and
(b) allocate
:
(i)
 to principal
,
 the portion of the receipt or disbursement accruing before the date on
which a decedent died or an income interest begins[
,
]
;
 and
(ii)
 to income
,
 the balance.
(4) A receipt or disbursement is periodic under Subsections (2) and (3) if:
(a) the receipt or disbursement [
must
] 
shall
 be paid at regular intervals under an
obligation to make payments; or
(b) the payor customarily makes payments at regular intervals.
(5) (a) An item of income or obligation is due under this section on the date 
on which
the payor is required to make a payment.
(b) If a payment date is not stated, there is no due date.
(6) Distributions to shareholders or other owners from an entity to which Section
22-3-401
 applies are due:
(a) on the date fixed by or on behalf of the entity for determining the persons entitled to
receive the distribution;
(b) if no date is fixed, on the date of the decision by or on behalf of the entity to make
the distribution; or
(c) if no date is fixed and the fiduciary does not know the date of the decision by or on
behalf of the entity to make the distribution, on the date the fiduciary learns of the decision.
Section 32. Section 
22-3-703 (Effective 07/01/20)
 is amended to read:
22-3-703 (Effective 07/01/20).
Apportionment when income interest ends.
(1) In this section:
(a) "Undistributed income" means net income received on or before the date on which
an income interest ends.
(b) "Undistributed income" does not include an item of income or expense [
which
] 
that
is due or accrued or net income that has been added or is required to be added
,
 to principal
under the terms of the trust.
(2) Except as otherwise provided in Subsection (3), when a mandatory income interest
of a beneficiary ends, the fiduciary shall pay the beneficiary's share of the undistributed income
that is not disposed of under the terms of the trust to the beneficiary or, if the beneficiary does
not survive the date 
that
 the interest ends, to the beneficiary's estate.
(3) If a beneficiary has an unqualified power to withdraw more than 5% of the value of
a trust immediately before an income interest ends:
(a) the fiduciary shall allocate to principal the undistributed income from the portion of
the trust [
which
] 
that
 may be withdrawn; and
(b) Subsection (2) applies only to the balance of the undistributed income.
(4) When a fiduciary's obligation to pay a fixed annuity or a fixed fraction of the value
of assets ends, the fiduciary shall prorate the final payment as required to preserve an income
tax, gift tax, estate tax, or other tax benefit.
Section 33. Section 
22-3-801 (Effective 07/01/20)
 is amended to read:
22-3-801 (Effective 07/01/20).
Uniformity of application and construction.
In applying and construing this uniform act, consideration must be given to the need to
promote uniformity of the law with respect to [
its
] 
the uniform act's
 subject matter among
states that enact it.
Section 34. Section 
22-3-803 (Effective 07/01/20)
 is amended to read:
22-3-803 (Effective 07/01/20).
Application to trust or estate.
This chapter applies to a trust or estate existing or created on or after July 1, [
]
, except as otherwise expressly provided in the terms of the trust or this chapter.
Section 35. Section 
22-3-804 (Effective 07/01/20)
 is amended to read:
22-3-804 (Effective 07/01/20).
Severability.
If any provision of this chapter or [
its
] 
the
 application 
of this chapter
 to any person or
circumstance is held invalid, the invalidity does not affect other provisions or applications of
this chapter [
which
] 
that
 can be given effect without the invalid provision or application, and to
this end the provisions of this chapter are severable.
Section 36. Section 
75-7-103 (Superseded 07/01/20)
 is amended to read:
75-7-103 (Superseded 07/01/20).
Definitions.
(1) In this chapter:
(a) "Action," with respect to an act of a trustee, includes a failure to act.
(b) "Beneficiary" means a person that:
(i) has a present or future beneficial interest in a trust, vested or contingent; or
(ii) in a capacity other than that of trustee, holds a power of appointment over trust
property.
(c) "Charitable trust" means a trust, or portion of a trust, created for a charitable
purpose described in Subsection 
75-7-405
(1).
(d) "Environmental law" means a federal, state, or local law, rule, regulation, or
ordinance relating to protection of the environment.
(e) "Interests of the beneficiaries" means the beneficial interests provided in the terms
of the trust.
(f) "Jurisdiction," with respect to a geographic area, includes a state or country.
(g) "Power of withdrawal" means a presently exercisable general power of appointment
other than a power exercisable only upon consent of the trustee or a person holding an adverse
interest.
(h) "Qualified beneficiary" means a beneficiary who, on the date the beneficiary's
qualification is determined:
(i) is a current distributee or permissible distributee of trust income or principal; or
(ii) would be a distributee or permissible distributee of trust income or principal if the
trust terminated on that date.
(i) "Resident estate" or "resident trust"means:
(i) an estate of a decedent who at death was domiciled in this state;
(ii) a trust, or a portion of a trust, consisting of property transferred by will of a
decedent who at his death was domiciled in this state; or
(iii) a trust administered in this state.
(j) "Revocable," as applied to a trust, means revocable by the settlor without the
consent of the trustee or a person holding an adverse interest.
(k) "Settlor" means a person, including a testator, who creates, or contributes property
to, a trust. If more than one person creates or contributes property to a trust, each person is a
settlor of the portion of the trust property attributable to that person's contribution except to the
extent another person has the power to revoke or withdraw that portion.
(l) "Spendthrift provision" means a term of a trust which restrains both voluntary and
involuntary transfer or encumbrance of a beneficiary's interest.
(m) "Terms of a trust" means:
(i) [
subject to
] 
except as otherwise provided in
 Subsection (1)(m)(ii), the manifestation
of the settlor's intent regarding a trust's provisions as:
(A) expressed in the trust instrument; or
(B) established by other evidence that would be admissible in a judicial proceeding; or
(ii) the trust's provisions, as established, determined, or amended by:
(A) a trustee or [
other person
] 
trust director
 in accordance with applicable law;
(B) a court order; or
(C) a nonjudicial settlement agreement under Section 
75-7-110
.
(n) "Trust instrument" means an instrument executed by the settlor that contains terms
of the trust, including any amendments thereto.
(2) Terms not specifically defined in this section have the meanings provided in
Section 
75-1-201
.
Section 37. Section 
75-7-103 (Effective 07/01/20)
 is amended to read:
75-7-103 (Effective 07/01/20).
Definitions.
(1) In this chapter:
(a) "Action," with respect to an act of a trustee, includes a failure to act.
(b) "Beneficiary" means a person that:
(i) has a present or future beneficial interest in a trust, vested or contingent; or
(ii) in a capacity other than that of trustee, holds a power of appointment over trust
property.
(c) "Charitable trust" means a trust, or portion of a trust, created for a charitable
purpose described in Subsection 
75-7-405
(1).
(d) "Environmental law" means a federal, state, or local law, rule, regulation, or
ordinance relating to protection of the environment.
(e) "Interests of the beneficiaries" means the beneficial interests provided in the terms
of the trust.
(f) "Jurisdiction," with respect to a geographic area, includes a state or country.
(g) "Power of withdrawal" means a presently exercisable general power of appointment
other than a power exercisable only upon consent of the trustee or a person holding an adverse
interest.
(h) "Qualified beneficiary" means a beneficiary who, on the date the beneficiary's
qualification is determined:
(i) is a current distributee or permissible distributee of trust income or principal; or
(ii) would be a distributee or permissible distributee of trust income or principal if the
trust terminated on that date.
(i) "Resident estate" or "resident trust"means:
(i) an estate of a decedent who at death was domiciled in this state;
(ii) a trust, or a portion of a trust, consisting of property transferred by will of a
decedent who at his death was domiciled in this state; or
(iii) a trust administered in this state.
(j) "Revocable," as applied to a trust, means revocable by the settlor without the
consent of the trustee or a person holding an adverse interest.
(k) "Settlor" means a person, including a testator, who creates, or contributes property
to, a trust. If more than one person creates or contributes property to a trust, each person is a
settlor of the portion of the trust property attributable to that person's contribution except to the
extent another person has the power to revoke or withdraw that portion.
(l) "Spendthrift provision" means a term of a trust which restrains both voluntary and
involuntary transfer or encumbrance of a beneficiary's interest.
(m) "Terms of a trust" means:
(i) except as otherwise provided in Subsection (1)(m)(ii), the manifestation of the
settlor's intent regarding a trust's provisions as:
(A) expressed in the trust instrument; or
(B) established by other evidence that would be admissible in a judicial proceeding;
(ii) the trust's provisions as established, determined, or amended by:
(A) a trustee or trust director in accordance with the applicable law;
(B) court order; or
(C) a nonjudicial settlement agreement under Section 
75-7-110
[
;
]
.
[
(iii) for an estate, a will; or
]
[
(iv) for a life estate or term interest, the corresponding manifestation of the rights of
the beneficiaries.
]
(n) "Trust instrument" means an instrument executed by the settlor that contains terms
of the trust, including any amendments thereto.
(2) Terms not specifically defined in this section have the meanings provided in
Section 
75-1-201
.
Section 38. 
Effective date.
(1) Except as provided in Subsection (2), the amendments to Section 
75-7-103
(Superseded 07/01/20) in this bill take effect on May 12, 2020.
(2) This bill takes effect on July 1, 2020.