This chapter may be cited as the "Uniform Principal and Income Act".
(Apr. 27, 2001, D.C. Law 13-292, § 502(c), 48 DCR 2087.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
Law 13-292, the "Omnibus Trusts and Estates Amendment Act of 2000", was introduced in Council and assigned Bill No. 13-298, which was referred to the Committee on the Judiciary. The Bill was adopted on first and second readings on December 5, 2000, and December 19, 2000, respectively. Signed by the Mayor on January 26, 2001, it was assigned Act No. 13-599 and transmitted to both Houses of Congress for its review. D.C. Law 13-292 became effective on April 27, 2001.
Miscellaneous Notes
Section 1102 of D.C. Law 13-292 provides:
"For purposes of Title 5 and Title 9 and sections 801(b), 805, and 806 of Title 8 [of this act], the provisions relating to the administration of decedent's estates shall apply only to the estates of decedent's who die on or after the effective date of this act."
Uniform Law
This section is based upon § 101 of the Uniform Principal and Income Act (1997 Act). See 7B Uniform Laws Annotated, Master Edition, or ULA Database on Westlaw.
For the purposes of this chapter, the term:
(1) "Accounting period" means a calendar year unless another 12-month period is selected by a fiduciary. The term includes a portion of a calendar year or other 12-month period that begins when an income interest begins or ends when an income interest ends.
(2) "Beneficiary" includes, in the case of a decedent's estate, an heir, legatee, and devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary.
(2A) "Domestic partner" shall have the same meaning as provided in § 32- 701(3).
(2B) "Domestic partnership" shall have the same meaning as provided in § 32- 701(4).
(3) "Fiduciary" means a personal representative or a trustee. The term includes an executor, administrator, successor personal representative, special administrator, and a person performing substantially the same function.
(4) "Income" means money or property that a fiduciary receives as current return from a principal asset. The term includes a portion of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in subchapter IV of this chapter.
(5) "Income beneficiary" means a person to whom net income of a trust is or may be payable.
(6) "Income interest" means the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee's discretion.
(7) "Mandatory income interest" means the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.
(8) "Net income" means the total receipts allocated to income during an accounting period minus the disbursements made from income during the period, plus or minus transfers under this chapter to or from income during the period.
(9) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government; governmental subdivision, agency, or instrumentality; public corporation, or any other legal or commercial entity.
(10) "Principal" means property held in trust for distribution to a remainder beneficiary when the trust terminates.
(11) "Remainder beneficiary" means a person entitled to receive principal when an income interest ends.
(12) "Terms of a trust" means the manifestation of the intent of a settlor or decedent with respect to the trust, expressed in a manner that admits of its proof in a judicial proceeding, whether by written or spoken words or by conduct.
(13) "Trustee" includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.
(Apr. 27, 2001, D.C. Law 13-292, § 502(c), 48 DCR 2087; Sept. 12, 2008, D.C. Law 17-231, § 26(a), 55 DCR 6758.)
HISTORICAL AND STATUTORY NOTES
Effect of Amendments
D.C. Law 17-231 added pars. (2A) and (2B).
Legislative History of Laws
For Law 13-292, see notes following § 28-4801.01.
Law 17-231, the "Omnibus Domestic Partnership Equality Amendment Act of 2008", was introduced in Council and assigned Bill No. 17-135, which was referred to the Committee on Public Safety and the Judiciary. The Bill was adopted on first and second readings on April 1, 2008, and May 6, 2008, respectively. Signed by the Mayor on June 6, 2008, it was assigned Act No. 17-403 and transmitted to both Houses of Congress for its review. D.C. Law 17-231 became effective on September 12, 2008.
Uniform Law
This section is based upon § 102 of the Uniform Principal and Income Act (1997 Act). See 7B Uniform Laws Annotated, Master Edition, or ULA Database on Westlaw.
(a) In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of subchapters II and III of this chapter, a fiduciary:
(1) Shall administer a trust or estate in accordance with the terms of the trust or the will, even if there is a different provision in this chapter;
(2) May administer a trust or estate by the exercise of a discretionary power of administration given to the fiduciary by the terms of the trust or the will, even if the exercise of the power produces a result different from a result required or permitted by this chapter;
(3) Shall administer a trust or estate in accordance with this chapter if the terms of the trust or the will do not contain a different provision or do not give the fiduciary a discretionary power of administration; and
(4) Shall add a receipt or charge a disbursement to principal to the extent that the terms of the trust and this chapter do not provide a rule for allocating the receipt or disbursement to or between principal and income.
(b) In exercising the power to adjust under § 28-4801.04(a) or a discretionary power of administration regarding a matter within the scope of this chapter, whether granted by the terms of a trust, a will, or this chapter, a fiduciary shall administer a trust or estate impartially, based on what is fair and reasonable to all of the beneficiaries, except to the extent that the terms of the trust or the will clearly manifest an intention that the fiduciary shall or may favor one or more of the beneficiaries. A determination in accordance with this chapter is presumed to be fair and reasonable to all of the beneficiaries.
(Apr. 27, 2001, D.C. Law 13-292, § 502(c), 48 DCR 2087.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
For Law 13-292, see notes following § 28-4801.01.
Uniform Law
This section is based upon § 103 of the Uniform Principal and Income Act (1997 Act). See 7B Uniform Laws Annotated, Master Edition, or ULA Database on Westlaw.
(a) A trustee may adjust between principal and income to the extent the trustee considers necessary if the trustee invests and manages trust assets as a prudent investor, the terms of the trust describe the amount that may or must be distributed to a beneficiary by referring to the trust's income, and the trustee determines, after applying the rules in § 28-4801.03(a), that the trustee is unable to comply with § 28-4801.03(b).
(b) In deciding whether and to what extent to exercise the power conferred by subsection (a) of this section, a trustee shall consider all factors relevant to the trust and its beneficiaries, including the following factors to the extent they are relevant:
(1) The nature, purpose, and expected duration of the trust;
(2) The intent of the settlor;
(3) The identity and circumstances of the beneficiaries;
(4) The needs for liquidity, regularity of income, and preservation and appreciation of capital;
(5) The assets held in the trust; the extent to which they consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property; the extent to which an asset is used by a beneficiary; and whether an asset was purchased by the trustee or received from the settlor;
(6) The net amount allocated to income under the other sections of this chapter and the increase or decrease in the value of the principal assets, which the trustee may estimate as to assets for which market values are not readily available;
(7) Whether and to what extent the terms of the trust give the trustee the power to invade principal or accumulate income or prohibit the trustee from invading principal or accumulating income, and the extent to which the trustee has exercised a power from time to time to invade principal or accumulate income;
(8) The actual and anticipated effect of economic conditions on principal and income and effects of inflation and deflation; and
(9) The anticipated tax consequences of an adjustment.
(c) A trustee may not make an adjustment:
(1) That diminishes the income interest in a trust that requires all of the income to be paid at least annually to a spouse or domestic partner and for which an estate tax or gift tax marital deduction would be allowed, in whole or in part, if the trustee did not have the power to make the adjustment;
(2) That reduces the actuarial value of the income interest in a trust to which a person transfers property with the intent to qualify for a gift tax exclusion;
(3) That changes the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets;
(4) From any amount that is permanently set aside for charitable purposes under a will or the terms of a trust unless both income and principal are so set aside;
(5) If possessing or exercising the power to make an adjustment causes an individual to be treated as the owner of all or part of the trust for income tax purposes, and the individual would not be treated as the owner if the trustee did not possess the power to make an adjustment;
(6) If possessing or exercising the power to make an adjustment causes all or part of the trust assets to be included for estate tax purposes in the estate of an individual who has the power to remove a trustee or appoint a trustee, or both, and the assets would not be included in the estate of the individual if the trustee did not possess the power to make an adjustment;
(7) If the trustee is a beneficiary of the trust; or
(8) If the trustee is not a beneficiary, but the adjustment would benefit the trustee directly or indirectly.
(d) If subsection (c)(5), (6), (7), or (8) of this section applies to a trustee and there is more than one trustee, a cotrustee to whom the provision does not apply may make the adjustment unless the exercise of the power by the remaining trustee or trustees is not permitted by the terms of the trust.
(e) A trustee may release the entire power conferred by subsection (a) of this section or may release only the power to adjust from income to principal or the power to adjust from principal to income if the trustee is uncertain about whether possessing or exercising the power will cause a result described in subsection (c)(1) through (6) or (c)(8) of this section or if the trustee determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in subsection (c) of this section. The release may be permanent or for a specified period, including a period measured by the life of an individual.
(f) Terms of a trust that limit the power of a trustee to make an adjustment between principal and income do not affect the application of this section unless it is clear from the terms of the trust that the terms are intended to deny the trustee the power of adjustment conferred by subsection (a) of this section.
(Apr. 27, 2001, D.C. Law 13-292, § 502(c), 48 DCR 2087; Sept. 12, 2008, D.C. Law 17-231, § 26(b), 55 DCR 6758.)
HISTORICAL AND STATUTORY NOTES
Effect of Amendments
D.C. Law 17-231, in subsec. (c)(1), substituted "spouse or domestic partner" for "spouse".
Legislative History of Laws
For Law 13-292, see notes following § 28-4801.01.
For Law 17-231, see notes following § 28-4801.04.
Uniform Law
This section is based upon § 104 of the Uniform Principal and Income Act (1997 Act). See 7B Uniform Laws Annotated, Master Edition, or ULA Database on Westlaw.
