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District of Columbia Official Code 2001 Edition. |
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Division V. Local Business Affairs. |
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Title 28. Commercial Instruments and Transactions. |
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Subtitle II. Other Commercial Transactions. |
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Chapter 48. Principal and Income; Uniform Law. |
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Subchapter IV. Allocation of Receipts During Administration of Trust. |
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Part C. Receipts Normally Apportioned.
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Current through October 23, 2012
(a) For the purposes of this section, the term:
(1) "Payment" means a payment that a trustee may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payer in exchange for future payments. The term "payment" includes a payment made in money or property from the payer's general assets or from a separate fund created by the payer. For the purposes of subsections (d), (d-1), (d-2), and (d-3) of this section, the term "payment" also includes any payment from any separate fund, regardless of the reason for the payment.
(2) "Separate fund" includes a private or commercial annuity, an individual retirement account, and a pension, profit-sharing, stock-bonus, or stock-ownership plan.
(b) To the extent that a payment is characterized as interest, or a dividend, or a payment made in lieu of interest or a dividend, a trustee shall allocate the payment to income. The trustee shall allocate to principal the balance of the payment and any other payment received in the same accounting period that is not characterized as interest, a dividend, or an equivalent payment.
(c) If no part of a payment is characterized as interest, a dividend, or an equivalent payment, and all or part of the payment is required to be made, a trustee shall allocate to income 10 percent of the part that is required to be made during the accounting period and the balance to principal. If no part of a payment is required to be made or the payment received is the entire amount to which the trustee is entitled, the trustee shall allocate the entire payment to principal. For purposes of this subsection, a payment is not required to be made to the extent that it is made because the trustee exercises a right of withdrawal.
(d) Except as otherwise provided in subsection (d-1) of this section, subsections (d-2) and (d-3) of this section apply, and subsections (b) and (c) of this section do not apply, in determining the allocation of a payment made from a separate fund to:
(1) A trust to which an election to qualify for a marital deduction under section 2056(b)(7) of the Internal Revenue Code of 1986, approved August 5, 1997 (68A Stat. 392; 26 U.S.C. § 2056(b)(7)), has been made; or
(2) A trust that qualifies for the marital deduction under section 2056(b)(5) of the Internal Revenue Code of 1986, approved August 5, 1997 (68A Stat. 392; 26 U.S.C. § 2056(b)(5)).
(d-1) Subsections (d), (d-2), and (d-3) of this section do not apply if and to the extent that the series of payments would, without the application of subsection (d) of this section, qualify for the marital deduction under section 2056(b)(7)(C) of the Internal Revenue Code of 1986, approved August 5, 1997 (68A Stat. 392; 26 U.S.C. § 2056(b)(7)(C)).
(d-2) A trustee shall determine the internal income of each separate fund for the accounting period as if the separate fund were a trust subject to this chapter. Upon request of the surviving spouse, the trustee shall demand that the person administering the separate fund distribute the internal income to the trust. The trustee shall allocate a payment from the separate fund to income to the extent of the internal income of the separate fund and distribute that amount to the surviving spouse. The trustee shall allocate the balance of the payment to principal. Upon request of the surviving spouse, the trustee shall allocate principal to income to the extent the internal income of the separate fund exceeds payments made from the separate fund to the trust during the accounting period.
(d-3) If a trustee cannot determine the internal income of a separate fund but can determine the value of the separate fund, the internal income of the separate fund is deemed to equal 4 % of the fund's value, according to the most recent statement of value preceding the beginning of the accounting period. If the trustee can determine neither the internal income of the separate fund nor the fund's value, the internal income of the fund is deemed to equal the product of the interest rate and the present value of the expected future payments, as determined under section 7520 of the Internal Revenue Code of 1986, approved November 10, 1988 (102 Stat. 3668; 26 U.S.C. § 7520), for the month preceding the accounting period for which the computation is made.
(e) This section does not apply to payments to which § 28-4804.10 applies.
(Apr. 27, 2001, D.C. Law 13-292, § 502(c), 48 DCR 2087; Sept. 12, 2008, D.C. Law 17-231, § 26(c), 55 DCR 6758; July 23, 2010, D.C. Law 18-197, § 2(b), 57 DCR 4524.)
HISTORICAL AND STATUTORY NOTES
Effect of Amendments
D.C. Law 17-231, in subsec. (d), substituted "marital or domestic partnership" for "marital".
D.C. Law 18-197 rewrote the section, which had read as follows:
"(a) For the purposes of this section, the term 'payment' means a payment that a trustee may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payer in exchange for future payments. The term "payment" includes a payment made in money or property from the payor's general assets or from a separate fund created by the payer, including a private or commercial annuity, an individual retirement account, and a pension, profit-sharing, stock-bonus, or stock-ownership plan.
"(b) To the extent that a payment is characterized as interest or a dividend or a payment made in lieu of interest or a dividend, a trustee shall allocate it to income. The trustee shall allocate to principal the balance of the payment and any other payment received in the same accounting period that is not characterized as interest, a dividend, or an equivalent payment.
"(c) If no part of a payment is characterized as interest, a dividend, or an equivalent payment, and all or part of the payment is required to be made, a trustee shall allocate to income 10 percent of the part that is required to be made during the accounting period and the balance to principal. If no part of a payment is required to be made or the payment received is the entire amount to which the trustee is entitled, the trustee shall allocate the entire payment to principal. For purposes of this subsection, a payment is not "required to be made" to the extent that it is made because the trustee exercises a right of withdrawal.
"(d) If, to obtain an estate tax marital or domestic partnership deduction for a trust, a trustee must allocate more of a payment to income than provided for by this section, the trustee shall allocate to income the additional amount necessary to obtain the marital or domestic partnership deduction.
"(e) This section does not apply to payments to which § 28-4804.10 applies."
Legislative History of Laws
For Law 13-292, see notes following § 28-4801.01.
For Law 17-231, see notes following § 28-4801.04.
Law 18-197, the "Uniform Principal and Income Technical Amendments Act of 2010", was introduced in Council and assigned Bill No. 18-563, which was referred to the Committee on Public Safety and the Judiciary. The Bill was adopted on first and second readings on April 20, 2010, and May 4, 2010, respectively. Signed by the Mayor on May 19, 2010, it was assigned Act No. 18- 409 and transmitted to both Houses of Congress for its review. D.C. Law 18-197 became effective on July 23, 2010.
Uniform Law
This section is based upon § 409 of the Uniform Principal and Income Act (1997 Act). See 7B Uniform Laws Annotated, Master Edition, or ULA Database on Westlaw.
