North Carolina Statutes

Chapter 37A Uniform Principal and Income Act

Article 1 - Definitions and Fiduciary Duties; Conversion to Unitrust; Judicial Control of Discretionary Power.

  • § 37A-1-101   Short title
    This Chapter may be cited as the Uniform Principal and Income Act. (2003‑232, s. 2.)
  • § 37A-1-102   Definitions
    The following definitions apply in this Chapter: (1) "Accounting period" means a calendar year unless another 12‑month period is selected by a fiduciary. The term...
  • § 37A-1-103   Fiduciary duties; general principles
    (a) In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of Articles 2 and...
  • § 37A-1-104   Trustee's power to adjust
    (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...
  • § 37A-1-104.1   Definitions
    The following definitions apply to this Part: (1) Code. The Internal Revenue Code of 1986, as amended from time to time, and any statutory enactment...
  • § 37A-1-104.2   Conversion in trustee's discretion without court approval
    (a) Any trustee, other than an interested trustee, or, where two or more persons are acting as trustees, a majority of the trustees who are...
  • § 37A-1-104.3   Conversion with court approval
    (a) If any trustee desires to (i) convert an income trust to a total return unitrust, (ii) reconvert a total return unitrust to an income...
  • § 37A-1-104.4   Determination of unitrust amount
    (a) The fair market value of the trust shall be determined at least annually, using a valuation date selected by the trustee in its discretion....
  • § 37A-1-104.5   Matters in trustee's discretion
    In administering a total return unitrust, the trustee may, in its sole discretion but subject to the provisions of the governing instrument, determine: (1) The...
  • § 37A-1-104.6   No effect on principal distributions
    Conversion to a total return unitrust under this Part shall not affect any other provision of the governing instrument, if any, regarding distributions of principal....
  • § 37A-1-104.7   Repealed by Session Laws 2007-106, s. 49.1, effective October 1, 2007
  • § 37A-1-104.8   No liability on part of trustee or disinterested person acting in good faith
    No trustee or disinterested person who in good faith takes or fails to take any action under this Part shall be liable to any person...
  • § 37A-1-104.9   Applicability
    This Part shall apply to all trusts in existence on, or created after January 1, 2004, unless (i) the governing instrument contains a provision clearly...
  • § 37A-1-104.21   Definitions
    (a) An "express total return unitrust" means a trust that has a governing instrument requiring the distribution at least annually of a unitrust amount equal...
  • § 37A-1-104.22   Determination of unitrust amount
    (a) The unitrust amount to be distributed by the express total return unitrust may be determined in the governing instrument by reference to the net...
  • § 37A-1-104.23   Effect of distribution of unitrust amount
    The distribution from an express total return unitrust of the fixed percentage of not less than three percent (3%) nor more than five percent (5%)...
  • § 37A-1-104.24   Change or conversion of unitrust amount
    (a) The terms of the governing instrument of an express total return unitrust may provide the method similar to the method provided under G.S. 37A‑1‑104.2(a)...
  • § 37A-1-104.25   Determination of character of unitrust amount
    Unless the terms of the governing instrument of the express total return unitrust specifically provide otherwise, the trustee: (1) Shall consider the unitrust amount as...
  • § 37A-1-104.26   Unitrust amount in excess of a five percent payout
    A trust that provides for a fixed percentage payout in excess of five percent (5%) per year is considered an express total return unitrust that...
  • § 37A-1-105   Judicial control of discretionary power
    (a) The court shall not order a fiduciary to change a decision to exercise or not to exercise a discretionary power conferred by this Chapter...

Article 2 - Decedent's Estate or Terminating Income Interest.

Article 3 - Apportionment at Beginning and End of Income Interest.

Article 4 - Allocation of Receipts During Administration of Trust.

  • § 37A-4-401   Character of receipts
    (a) In this section, "entity" means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund, or any other...
  • § 37A-4-402   Distribution from trust or estate
    A trustee shall allocate to income an amount received as a distribution of income from a trust or an estate in which the trust has...
  • § 37A-4-403   Business and other activities conducted by trustee
    (a) If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account...
  • § 37A-4-404   Principal receipts
    A trustee shall allocate to principal: (1) To the extent not allocated to income under this Chapter, assets received from a transferor during the transferor's...
  • § 37A-4-405   Rental property
    To the extent that a trustee accounts for receipts from rental property under this section, the trustee shall allocate to income an amount received as...
  • § 37A-4-406   Obligation to pay money
    (a) An amount received as interest, whether determined at a fixed, variable, or floating rate, on an obligation to pay money to the trustee, including...
  • § 37A-4-407   Insurance policies and similar contracts
    (a) Except as otherwise provided in subsection (b) of this section, a trustee shall allocate to principal the proceeds of a life insurance policy or...
  • § 37A-4-408   Insubstantial allocations not required
    If a trustee determines that an allocation between principal and income required by G.S. 37A‑4‑409, 37A‑4‑410, 37A‑4‑411, 37A‑4‑412, or 37A‑4‑415 is insubstantial, the trustee may...
  • § 37A-4-409   Deferred compensation, annuities, and similar payments
    (a) In this section, "payment" means a payment that a trustee may receive over a fixed number of years or during the life of one...
  • § 37A-4-410   Liquidating asset
    (a) In this section, "liquidating asset" means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a...
  • § 37A-4-411   Minerals, water, and other natural resources
    (a) To the extent that a trustee accounts for receipts from an interest in minerals or other natural resources under this section, the trustee shall...
  • § 37A-4-412   Timber
    (a) To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee shall...
  • § 37A-4-413   Property not productive of income
    (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...
  • § 37A-4-414   Derivatives and options
    (a) In this section, "derivative" means a contract or financial instrument or a combination of contracts and financial instruments that gives a trust the right...
  • § 37A-4-415   Asset-backed securities
    (a) In this section, "asset‑backed security" means an asset whose value is based upon the right it gives the owner to receive distributions from the...

Article 5 - Allocation of Disbursements During Administration of Trust.

  • § 37A-5-501   Disbursements from income
    A trustee shall make the following disbursements from income to the extent that they are not disbursements to which G.S. 37A‑2‑201(2)b. or G.S. 37A‑2‑201(2)c. applies:...
  • § 37A-5-502   Disbursements from principal
    (a) A trustee shall make the following disbursements from principal: (1) The remaining one‑half of the disbursements described in G.S. 37A‑5‑501(1) and G.S. 37A‑5‑501(2); (2)...
  • § 37A-5-503   Transfers from income to principal for depreciation
    (a) In this section, "depreciation" means a reduction in value due to wear, tear, decay, corrosion, or gradual obsolescence of a fixed asset having a...
  • § 37A-5-504   Transfers from income to reimburse principal
    (a) If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income...
  • § 37A-5-505   Income taxes
    (a) A tax required to be paid by a trustee based on receipts allocated to income shall be paid from income. (b) A tax required...
  • § 37A-5-506   Adjustments between principal and income because of taxes
    (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...

Article 6 - Miscellaneous Provisions.

  • § 37A-6-601   Uniformity of application and construction
    In applying and construing this Chapter, consideration shall be given to the need to promote uniformity of the law with respect to its subject matter...
  • § 37A-6-602   Severability clause
    If any provision of this Chapter or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or...