Cal. Prob. Code § 16371
Death of Individual or Termination of Income Interest
Redline — January 1, 2011 → current.View current text →
Current — January 1, 2023
As of January 1, 2011
(a) A trustee shall make the following disbursements from principal:
(1) Except as otherwise ordered by the court, the remaining one-half of the disbursements described in subdivisions (a) and (b) of Section 16370.
(2) Except as otherwise ordered by the court, all of the trustee’s compensation calculated on principal as a fee for acceptance, distribution, or termination, and disbursements made to prepare property for sale.
(3) Payments on the principal of a trust debt.
(4) Expenses of a proceeding that concerns primarily principal, including a proceeding to construe the trust or to protect the trust or its property.
(5) Premiums paid on a policy of insurance not described in subdivision (d) of Section 16370 of which the trust is the owner and beneficiary.
(6) Estate, inheritance, and other transfer taxes, including penalties, apportioned to the trust.
(7) Disbursements related to environmental matters, including reclamation, assessing environmental conditions, remedying and removing environmental contamination, monitoring remedial activities and the release of substances, preventing future releases of substances, collecting amounts from persons liable or potentially liable for the costs of those activities, penalties imposed under environmental laws or regulations and other payments made to comply with those laws or regulations, statutory or common law claims by third parties, and defending claims based on environmental matters.
(b) If a principal asset is encumbered with an obligation that requires income from that asset to be paid directly to the creditor, the trustee shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.
(a) Except to the extent that Article 3 (commencing with Section 16330) applies for a beneficiary that is a trust, each beneficiary described in subdivision (f) of Section 16370 is entitled to receive a share of the net income equal to the beneficiary’s fractional interest in undistributed principal assets, using values as of the distribution date. 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.
(b) In determining a beneficiary’s share of net income under subdivision (a), the following rules apply:
(1) 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.
(2) The beneficiary’s fractional interest under paragraph (1) shall be calculated on the aggregate value of the assets as of the distribution date without reducing the value by any unpaid principal obligation, and without regard to either of the following:
(A) Property specifically given to a beneficiary under the decedent’s will or the terms of the trust.
(B) Property required to pay pecuniary amounts not in trust.
(3) The distribution date under paragraph (1) may be the date as of which the fiduciary calculates the value of the assets, if that date is reasonably near the date on which the assets are distributed.
(c) To the extent a fiduciary does not distribute under this section all the collected but undistributed net income to each beneficiary as of a distribution date, the fiduciary shall maintain records showing the interest of each beneficiary in the net income.
(d) If this section applies to income from an asset, a fiduciary may apply the rules in this section 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.
Official source: California Legislative Information. Reproduced from public-domain California statutes; confirm against the official source for the current text. Not legal advice.