Cal. Prob. Code § 16365
Allocation of Disbursements
Redline — January 1, 2011 → current.View current text →
Current — January 1, 2023
As of January 1, 2011
(a) If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the spouse with sufficient income from or use of the trust assets, and if the amounts that the trustee transfers from principal to income under Section 16336 and distributes to the spouse from principal pursuant to the terms of the trust are insufficient to provide the spouse with the beneficial enjoyment required to obtain the marital deduction, the spouse may require the trustee to make property productive of income or convert it into productive property or exercise the power under subdivision (a) of Section 16336 within a reasonable time. The trustee may decide which action or combination of actions to take.
(b) In cases not governed by subdivision (a), proceeds from the sale or other disposition of a trust asset are principal without regard to the amount of income the asset produces during any accounting period.
(a) A tax required to be paid by a fiduciary that is based on receipts allocated to income shall be paid from income.
(b) A tax required to be paid by a fiduciary that is based on receipts allocated to principal shall be paid from principal, even if the tax is called an income tax by the taxing authority.
(c) Subject to subdivision (d) and Sections 16363, 16364, and 16366, a tax required to be paid by a fiduciary on a share of an entity’s taxable income in an accounting period shall be paid from the following:
(1) Income and principal, proportionately to the allocation between income and principal of receipts from the entity in the period.
(2) Principal, to the extent the tax exceeds the receipts from the entity in the period.
(d) After applying subdivisions (a) to (c), inclusive, a fiduciary shall adjust income or principal receipts, to the extent the taxes the fiduciary pays are reduced because of a deduction for a payment made to a beneficiary.
Official source: California Legislative Information. Reproduced from public-domain California statutes; confirm against the official source for the current text. Not legal advice.