Cal. Prob. Code § 16375
Apportionment at Beginning and End of Income Interest
Redline — January 1, 2011 → current.View current text →
Current — January 1, 2023
As of January 1, 2011
(a) A fiduciary may make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries that arise from any of the following:
(1) Elections and decisions, other than those described in subdivision (b), that the fiduciary makes from time to time regarding tax matters.
(2) An income tax or any other tax that is imposed upon the fiduciary or a beneficiary as a result of a transaction involving or a distribution from the estate or trust.
(3) The ownership by a decedent’s estate or trust of an interest in an entity whose taxable income, whether or not distributed, is includable in the taxable income of the estate, trust, or a beneficiary.
(b) If the amount of an estate tax marital deduction or charitable contribution deduction is reduced because a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting it for estate tax purposes, and as a result estate taxes paid from principal are increased and income taxes paid by a decedent’s estate, trust, or beneficiary are decreased, each estate, trust, or beneficiary that benefits from the decrease in income tax shall reimburse the principal from which the increase in estate tax is paid. 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 deduction or charitable contribution deduction but for the payment. The proportionate share of the reimbursement for each estate, trust, or beneficiary whose income taxes are reduced must be the same as its proportionate share of the total decrease in income tax. An estate or trust shall reimburse principal from income.
(a) An income beneficiary is entitled to net income in accordance with the terms of the trust from the date an income interest begins. The income interest begins on the date specified in the terms of the trust or, if no date is specified, on the date an asset becomes subject to either of the following:
(1) The trust for the current income beneficiary.
(2) A successive interest for a successor beneficiary.
(b) An asset becomes subject to a trust under paragraph (1) of subdivision (a) as follows:
(1) For an asset that is transferred to the trust during the settlor’s life, on the date the asset is transferred.
(2) 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.
(3) 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.
(c) An asset becomes subject to a successive interest under paragraph (2) of subdivision (a) on the day after the preceding income interest ends, as determined under subdivision (d), even if there is an intervening period of administration to wind up the preceding income interest.
(d) 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 is required to, distribute income.
Official source: California Legislative Information. Reproduced from public-domain California statutes; confirm against the official source for the current text. Not legal advice.