Chapter 469 Disclaimers of Property

469.465 - Severability clause.

Steven Groce, Attorney Advertisement

If any provision of sections 469.401 to 469.467 or the application of these sections to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of sections 469.401 to 469.467 which can be given effect without the invalid provision or application.

(L. 2001 H.B. 241)

469.461 - Adjustments between principal and income, when — estate tax marital deduction or charitable contributions, how handled.

1.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 which arise from:

(1)Elections and decisions, other than those described in subsection 2 of this section, 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; or

(3)The ownership by an 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.

2.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 an 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 shall 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 shall be the same as its proportionate share of the total decrease in income tax.An estate or trust shall reimburse principal from income.

(L. 2001 H.B. 241)

469.030 - Acceptance, how shown, preclusion of later disclaimer — who may accept or disclaim.

1.Except as otherwise provided in sections 469.090 and 469.100, acceptance of a transferred interest or a portion thereof may be shown by conduct, including acceptance of benefits.Acceptance precludes any later disclaimer.

2.A disclaimer or acceptance may be made on a person's behalf by the person's representative who may be an authorized agent, the guardian or conservator of a minor or disabled person, or the personal representative of a deceased person.

(L. 1997 S.B. 265)

469.330 - Cases not provided for in law.

In any case not provided for in sections 469.240 to 469.350 the rules of law and equity, including the law merchant and those rules of law and equity relating to trusts, agency, negotiable instruments and banking, shall continue to apply.

(L. 1959 S.B. 121 § 11, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.330

469.020 - Disclaimer, how and when made — delivery — right to disclaim.

1.A disclaimer is made by a writing showing an unconditional refusal to accept a transfer, or a portion thereof, signed by the disclaimant, or representative, and delivered on or before nine months after the transfer, or by any later time provided in the particular case or pursuant to other provisions of this chapter, and before any acceptance of the disclaimed interest.Delivery of a disclaimer may be accomplished by delivery to the transferor, the transferor's personal representative or other legal representative, or the holder of the legal title to the property to which the interest related.A disclaimer involving an estate or property within the jurisdiction of the probate division of a circuit court may be filed in that division.

2.The right to disclaim exists notwithstanding any intention to the contrary expressed by the transferor and notwithstanding any limitation on the disclaimant such as a spendthrift provision or similar restriction.

(L. 1997 S.B. 265)

469.120 - Retroactive effect.

This chapter shall be effective with respect to any disclaimer made after August 13, 1982, except that rights which have vested pursuant to any such disclaimer shall not be disturbed by the provisions of this chapter.

(L. 1997 S.B. 265)

469.320 - Deposit in name of two or more trustees.

When a deposit is made in a bank in the name of two or more persons as trustees and a check is drawn upon the trust account by any trustee or trustees authorized by the other trustee or trustees to draw checks upon the trust account, neither the payee nor other holder nor the bank is bound to inquire whether it is a breach of trust to authorize such trustee or trustees to draw checks upon the trust account, and is not liable unless the circumstances be such that the action of the payee or other holder or the bank amounts to bad faith.

(L. 1959 S.B. 121 § 10, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.320

469.300 - Deposit in name of principal.

If a check is drawn upon the account of his principal in a bank by a fiduciary who is empowered to draw checks upon his principal's account, the bank is authorized to pay such check without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing such check, or with knowledge of such facts that its action in paying the check amounts to bad faith.If, however, such a check is payable to the drawee bank and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the check.

(L. 1959 S.B. 121 § 8, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.300

469.459 - Taxes to be paid from income or principal, when.

1.A tax required to be paid by a trustee based on receipts allocated to income shall be paid from income.

2.A tax required to be paid by a trustee based on receipts allocated to principal shall be paid from principal, even if the tax is called an income tax by the taxing authority.

3.A tax required to be paid by a trustee on the trust's share of an entity's taxable income shall be paid:

(1)From income to the extent that receipts from the entity are allocated to income; and

(2)From principal to the extent that receipts from the entity are allocated only to principal.

4.After applying subsections 1 to 3 of this section, the trustee shall adjust income or principal receipts to the extent that the trust's taxes are reduced because the trust receives a deduction for payment made to a beneficiary.

(L. 2001 H.B. 241, A.L. 2011 S.B. 59)

469.908 - Prudent investor rule, standard.

The prudent investor rule imposes a standard of conduct, but does not contemplate a specific outcome or performance.Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustee's decision or action and not by hindsight.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.908

469.100 - Special rule for persons attaining majority — transfers after 1976.

In the case of a transfer made after 1976 creating an interest or future interest that has vested in a person before such person's twenty-first birthday, such interest shall be subject to disclaimer as provided in this chapter until nine months after the person's twenty-first birthday.No act or conduct of the person prior to such twenty-first birthday, other than a written acceptance, shall constitute an acceptance of any portion of the interest.

(L. 1997 S.B. 265)

469.600 - Doctrine of worthier title and Rule in Bingham's case abolished, effect of language describing beneficiaries.

The doctrine of worthier title and the Rule in Bingham's case is abolished as a rule of law and as a rule of construction.Language in a governing instrument describing the beneficiaries of a disposition as the transferor's "heirs", "heirs at law", "next of kin", "distributees", "relatives", or "family", or language of similar import does not create or presumptively create a reversionary interest in the transferor.

(L. 2006 S.B. 892)

469.455 - Depreciation not to be transferred.

1.As used in this section, the term "depreciation" means a reduction in value due to wear, tear, decay, corrosion or gradual obsolescence of a fixed asset having a useful life of more than one year.

2.A trustee may transfer to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, but may not transfer any amount for depreciation:

(1)Of that portion of real property used or available for use by a beneficiary as a residence or of tangible personal property held or made available for the personal use or enjoyment of a beneficiary;

(2)During the administration of a decedent's estate; or

(3)Pursuant to this section if the trustee is accounting pursuant to section 469.427 for the business or activity in which the asset is used.

3.An amount transferred to principal need not be held as a separate fund.

(L. 2001 H.B. 241)

469.904 - Trust assets, retention and disposition.

Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust assets and make and implement decisions concerning the retention and disposition of assets in order to bring the trust portfolio into compliance with the purposes, terms, distribution requirements, and other circumstances of the trust, and with the requirements of this act*.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.904

*"This act" (H.B. 1432, 1996) contained numerous sections.Consult Disposition of Sections table for a definitive listing.

469.900 - Citation of law — definitions.

Sections 469.900 to 469.913 shall be known, and may be cited, as the "Missouri Prudent Investor Act".As used in this act, the term "trustee" includes independent personal representatives and trustees, whether of express or implied trusts, and the term "trust" includes independently administered estates.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.900

469.451 - Required disbursements from income.

A trustee shall make the following disbursements from income to the extent that they are not disbursements to which paragraph (b) or (c) of subdivision (2) of section 469.413 applies:

(1)One-half of the regular compensation of the trustee and of any person providing investment advisory or custodial services to the trustee;

(2)One-half of all expenses for accountings, judicial proceedings, or other matters that involve both the income and remainder interests;

(3)All of the other ordinary expenses incurred in connection with the administration, management or preservation of trust property and the distribution of income, including interest, ordinary repairs, regularly recurring taxes assessed against principal, and expenses of a proceeding or other matter that concerns primarily the income interest; and

(4)Recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset.

(L. 2001 H.B. 241)

469.445 - Marital deduction, insufficient income, allowable actions.

1.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 pursuant to section 469.405 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, convert property within a reasonable time, or exercise the power conferred by subsection 1 of section 469.405.The trustee may decide which action or combination of actions to take.

2.In cases not governed by subsection 1 of this section, proceeds from the sale or other disposition of an asset are principal without regard to the amount of income the asset produces during any accounting period.

(L. 2001 H.B. 241)

469.910 - Trust terms and phrases, definition.

The following terms or comparable language in the provisions of a trust, unless otherwise limited or modified, authorize any investment or strategy permitted under this act*:"investments permissible by law for investment of trust funds", "legal investments", "authorized investments", "using the judgment and care under the circumstances then prevailing that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital", "prudent man rule", "prudent trustee rule", "prudent person rule", and "prudent investor rule".

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.910

*"This act" (H.B. 1432, 1996) contained numerous sections.Consult Disposition of Sections table for a definitive listing.

469.441 - Allocation of interest in minerals or other natural resources — interest in water, allocation of.

1.To the extent that a trustee accounts for receipts from an interest in minerals or other natural resources pursuant to this section, the trustee shall allocate them as follows:

(1)If received as nominal delay rental or nominal annual rent on a lease, a receipt shall be allocated to income;

(2)If received from a production payment, a receipt shall be allocated to income if and to the extent that the agreement creating the production payment provides a factor for interest or its equivalent.The balance shall be allocated to principal;

(3)If an amount received as a royalty, shut-in-well payment, take-or-pay payment, bonus or delay rental is more than nominal, ninety percent shall be allocated to principal and the balance to income;

(4)If an amount is received from a working interest or any other interest not provided for in subdivision (1), (2) or (3) of this subsection, ninety percent of the net amount received shall be allocated to principal and the balance to income.

2.An amount received on account of an interest in water that is renewable shall be allocated to income.If the water is not renewable, ninety percent of the amount shall be allocated to principal and the balance to income.

3.Sections 469.401 to 469.467 apply whether or not a decedent or donor was extracting minerals, water or other natural resources before the interest became subject to the trust.

4.If a trust owns an interest in minerals, water or other natural resources on August 28, 2001, the trustee may allocate receipts from the interest as provided in sections 469.401 to 469.467 or in the manner used by the trustee before August 28, 2001.If the trust acquires an interest in minerals, water or other natural resources after August 28, 2001, the trustee shall allocate receipts from the interest as provided in sections 469.401 to 469.467.

(L. 2001 H.B. 241)

469.449 - Allocation of collateral financial assets and asset-backed securities.

1.As used in this section, the phrase "asset-backed security" means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financial assets that provide collateral for the security.The phrase includes an asset that gives the owner the right to receive from the collateral financial assets only the interest or other current return or only the proceeds other than interest or current return.The phrase does not include an asset to which section 469.423 or 469.437 applies.

2.If a trust receives a payment from interest or other current return and from other proceeds of the collateral financial assets, the trustee shall allocate to income the portion of the payment which the payer identifies as being from interest or other current return and shall allocate the balance of the payment to principal.

3.If a trust receives one or more payments in exchange for the trust's entire interest in an asset-backed security in one accounting period, the trustee shall allocate the payments to principal.If a payment is one of a series of payments that will result in the liquidation of the trust's interest in the security over more than one accounting period, the trustee shall allocate ten percent of the payment to income and the balance to principal.

(L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

469.310 - Deposit in fiduciary's personal account.

If a fiduciary makes a deposit in a bank to his personal credit of checks drawn by him upon an account in his own name as fiduciary, or of checks payable to him as fiduciary, or of checks drawn by him upon an account in the name of his principal if he is empowered to draw checks thereon, or of checks payable to his principal and endorsed by him, if he is empowered to endorse such checks, or if he otherwise makes a deposit of funds held by him as fiduciary, the bank receiving such deposit is not bound to inquire whether the fiduciary is committing thereby a breach of his obligation as fiduciary; and the bank is authorized to pay the amount of the deposit or any part thereof upon the personal check of the fiduciary without being liable to the principal, unless the bank receives the deposit or pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in making such deposit or in drawing such check, or with knowledge of such facts that its action in receiving the deposit or paying the check amounts to bad faith.

(L. 1959 S.B. 121 § 9, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.310

469.110 - Chapter not exclusive.

This chapter does not abridge or affect the right of any person to transfer, release, disclaim or renounce any property, interest or power, or elect against a will, under any other statute or under the common law.

(L. 1997 S.B. 265)

469.010 - General rule, effect of disclaimer.

Any individual to whom property or an interest therein is donatively transferred by any means, including a transfer resulting from another disclaimer, may disclaim all or any portion of the transfer.Unless the terms of the transfer otherwise provide, the disclaimer shall cause the terms of the transfer to be applied to the disclaimed transfer and to any future interests taking effect thereafter as if the disclaimant had died immediately before the transfer.The presumption of a disclaimant's death does not prevent recognition of the disclaimant's later born children and their issue, assuming they have rights after all proper acceleration has taken place, nor does it prevent recognition of future and other interests of the disclaimant which are not disclaimed.For all purposes the disclaimed interest is deemed to have passed directly from the transferor to the ultimate taker or takers and is not subject to the claim of any creditor of the disclaimant.A disclaimed portion of a transfer passes to the same ultimate taker or takers and in the same proportions as in the case of a disclaimer of all of the transfer.

(L. 1997 S.B. 265)

469.911 - Applicability of certain sections.

Except as otherwise specifically provided in the terms of the trust or in sections 456.035 to 456.041 and sections 469.900 to 469.913, the provisions of sections 456.035 to 456.041 and sections 469.900 to 469.913 shall apply to any trust established before or after August 28, 2004, and to any trust asset acquired by the trustee before or after August 28, 2004.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.911

469.340 - Uniformity of interpretation.

This law shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it.

(L. 1959 S.B. 121 § 12, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.340

469.419 - Trustee to allocate income receipt or disbursement, when.

1.A trustee shall allocate an income receipt or disbursement other than one to which subdivision* (1) of section 469.413 applies to principal if its due date occurs before a decedent dies in the case of an estate or before an income interest begins in the case of a trust or successive income interest.

2.A trustee shall allocate an income receipt or disbursement to income if its due date occurs on or after the date on which a decedent dies or an income interest begins and it is a periodic due date.An income receipt or disbursement shall be treated as accruing from day to day if its due date is not periodic or it has no due date.The portion of the receipt or disbursement accruing before the date on which a decedent dies or an income interest begins shall be allocated to principal and the balance shall be allocated to income.

3.An item of income or an obligation is due on the date a payment is required.If a payment date is not stated, there is no due date for the purposes of sections 469.401 to 469.467.Distributions to shareholders or other owners from an entity to which section 469.423 applies are deemed to be due on the date fixed by the entity for determining who is entitled to receive the distribution or, if no date is fixed, on the declaration date for the distribution.A due date is periodic for receipts or disbursements that shall be paid at regular intervals under a lease or an obligation to pay interest or if an entity customarily makes distributions at regular intervals.

(L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

*Word "subsection" appears in original rolls.

469.240 - Definitions.

1.In sections 469.240 to 469.350 unless the context or subject matter otherwise requires:

(1)"Bank" includes any person or association of persons, whether incorporated or not, carrying on the business of banking;

(2)"Fiduciary" includes a trustee under any trust, expressed, implied, resulting or constructive, executor, administrator, guardian, conservator, curator, receiver, trustee in bankruptcy, assignee for the benefit of creditors, partner, agent, officer of a corporation, public or private, public officer, or any other person acting in a fiduciary capacity for any person, trust or estate;

(3)"Person" includes a corporation, partnership, or other association, or two or more persons having a joint or common interest;

(4)"Principal" includes any person to whom a fiduciary as such owes an obligation.

2.A thing is done "in good faith" within the meaning of sections 469.240 to 469.350, when it is in fact done honestly, whether it be done negligently or not.

(L. 1959 S.B. 121 § 1, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.240

469.040 - Revocable transfers.

A transfer that is subject to the transferor's power to revoke is not a transfer for purposes of this chapter unless such power is released or extinguished.

(L. 1997 S.B. 265)

469.411 - Determination of unitrust amount — definitions — exclusions to average net fair market value of assets — applicability of section to certain trusts — net income of trust to be unitrust amount, when.

1.(1)If the provisions of this section apply to a trust, the unitrust amount determined for each accounting year of the trust shall be a percentage between three and five percent of the average net fair market value of the trust, as of the first day of the trust's current accounting year.The percentage applicable to a trust shall be that percentage specified by the terms of the governing instrument or by the election made in accordance with subdivision (2) of subsection 5 of this section.

(2)The unitrust amount for the current accounting year computed pursuant to this section shall be proportionately reduced for any distributions, in whole or in part, other than distributions of the unitrust amount, and for any payments of expenses, including debts, disbursements and taxes, from the trust within a current accounting year that the trustee determines to be material and substantial, and shall be proportionately increased for the receipt, other than a receipt that represents a return on investment, of any additional property into the trust within a current accounting year.

(3)For purposes of this section, the net fair market values of the assets held in the trust on the first business day of a prior accounting quarter shall be adjusted to reflect any reduction, in the case of a distribution or payment, or increase, in the case of a receipt, for the prior accounting year pursuant to subdivision (1) of this subsection, as if the distribution, payment or receipt had occurred on the first day of the prior accounting year.

(4)In the case of a short accounting period, the trustee shall prorate the unitrust amount on a daily basis.

(5)In the case where the net fair market value of an asset held in the trust has been incorrectly determined in any quarter, the unitrust amount shall be increased in the case of an undervaluation, or be decreased in the case of an overvaluation, by an amount equal to the difference between the unitrust amount determined based on the correct valuation of the asset and the unitrust amount originally determined.

2.As used in this section, the following terms mean:

(1)"Average net fair market value", a rolling average of the fair market value of the assets held in the trust on the first business day of the lessor of the number of accounting quarters of the trust from the date of inception of the trust to the determination of the trust's average net fair market value, or twelve accounting quarters of the trust, regardless of whether this section applied to the ascertainment of net income for all valuation quarters;

(2)"Current accounting year", the accounting period of the trust for which the unitrust amount is being determined.

3.In determining the average net fair market value of the assets held in the trust, there shall not be included the value of:

(1)Any residential property or any tangible personal property that, as of the first business day of the current valuation year, one or more income beneficiaries of the trust have or had the right to occupy, or have or had the right to possess or control, other than in a capacity as trustee, and instead the right of occupancy or the right to possession or control shall be deemed to be the unitrust amount with respect to the residential property or the tangible personal property; or

(2)Any asset specifically given to a beneficiary under the terms of the trust and the return on investment on that asset, which return on investment shall be distributable to the beneficiary.

4.In determining the average net fair market value of the assets held in the trust pursuant to subsection 1 of this section, the trustee shall, not less often than annually, determine the fair market value of each asset of the trust that consists primarily of real property or other property that is not traded on a regular basis in an active market by appraisal or other reasonable method or estimate, and that determination, if made reasonably and in good faith, shall be conclusive as to all persons interested in the trust.Any claim based on a determination made pursuant to this subsection shall be barred if not asserted in a judicial proceeding brought by any beneficiary with any interest whatsoever in the trust within two years after the trustee has sent a report to all qualified beneficiaries that adequately discloses the facts constituting the claim.The rules set forth in subsection 2 of section 469.409 shall apply to the barring of claims pursuant to this subsection.

5.This section shall apply to the following trusts:

(1)Any trust created after August 28, 2001, with respect to which the terms of the trust clearly manifest an intent that this section apply;

(2)Any trust created under an instrument that became irrevocable on, before, or after August 28, 2001, if the trustee, in the trustee's discretion, elects to have this section apply unless the instrument creating the trust specifically prohibits an election under this subdivision.The trustee shall deliver notice to all qualified beneficiaries and the settlor of the trust, if he or she is then living, of the trustee's intent to make such an election at least sixty days before making that election.The trustee shall have sole authority to make the election.Section 469.402 shall apply for all purposes of this subdivision.An action or order by any court shall not be required.The election shall be made by a signed writing delivered to the settlor of the trust, if he or she is then living, and to all qualified beneficiaries.The election is irrevocable, unless revoked by order of the court having jurisdiction of the trust.The election may specify the percentage used to determine the unitrust amount pursuant to this section, provided that such percentage is between three and five percent, or if no percentage is specified, then that percentage shall be three percent.In making an election pursuant to this subsection, the trustee shall be subject to the same limitations and conditions as apply to an adjustment between income and principal pursuant to subsections 3 and 4 of section 469.405; and

(3)No action of any kind based on an election made by a trustee pursuant to subdivision (2) of this subsection shall be brought against the trustee by any beneficiary of that trust three years from the effective date of that election.

6.(1)Once the provisions of this section become applicable to a trust, the net income of the trust shall be the unitrust amount.

(2)Unless otherwise provided by the governing instrument, the unitrust amount distributed each year shall be paid from the following sources for that year up to the full value of the unitrust amount in the following order:

(a)Net income as determined if the trust were not a unitrust;

(b)Other ordinary income as determined for federal income tax purposes;

(c)Assets of the trust principal for which there is a readily available market value; and

(d)Other trust principal.

(3)Additionally, the trustee may allocate to trust income for each taxable year of the trust, or portion thereof:

(a)Net short-term capital gain described in the Internal Revenue Code, 26 U.S.C. Section 1222(5), for such year, or portion thereof, but only to the extent that the amount so allocated together with all other amounts to trust income, as determined under the provisions of this chapter without regard to this section, for such year, or portion thereof, does not exceed the unitrust amount for such year, or portion thereof;

(b)Net long-term capital gain described in the Internal Revenue Code, 26 U.S.C. Section 1222(7), for such year, or portion thereof, but only to the extent that the amount so allocated together with all other amounts, including amounts described in paragraph (a) of this subdivision, allocated to trust income for such year, or portion thereof, does not exceed the unitrust amount for such year, or portion thereof.

7.A trust with respect to which this section applies on August 28, 2011, may calculate the unitrust amount in accordance with the provisions of this section, as it existed either before or after such date, as the trustee of such trust shall determine in a writing kept with the records of the trust in the trustee's discretion.

(L. 2001 H.B. 241, A.L. 2002 H.B. 1151 merged with S.B. 742, A.L. 2004 H.B. 1511, A.L. 2009 H.B. 239, A.L. 2011 S.B. 59)

469.415 - Rights of beneficiaries to net income.

1.Each beneficiary described in subdivision (4) of section 469.413 is entitled to receive a portion 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 whom this section applies, each beneficiary, including one who does not receive part of the distribution, is entitled, as of each distribution date, to the net income the fiduciary has received after the date of death or terminating event or earlier distribution date but has not distributed as of the current distribution date.

2.In determining a beneficiary's share of net income, the following rules apply:

(1)The beneficiary is entitled to receive a portion of the net income equal to the beneficiary's fractional interest in the undistributed principal assets immediately before the distribution date, including assets that later may be sold to meet principal obligations;

(2)The beneficiary's fractional interest in the undistributed principal assets shall be calculated without regard to property specifically given to a beneficiary and property required to pay pecuniary amounts not in trust;

(3)The beneficiary's fractional interest in the undistributed principal assets shall be calculated on the basis of the aggregate value of those assets as of the distribution date without reducing the value by any unpaid principal obligation;

(4)The distribution date for purposes of this section 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 assets are actually distributed.

3.If a fiduciary does not distribute all of the collected but undistributed net income to each person as of a distribution date, the fiduciary shall maintain appropriate records showing the interest of each beneficiary in that net income.

4.A fiduciary may apply the rules in this section, to the extent that the fiduciary considers it appropriate, to net gain or loss realized after the date of death or terminating event or earlier distribution date from the disposition of a principal asset if this section applies to the income from the asset.

(L. 2001 H.B. 241)

469.401 - Definitions.

As used in sections 469.401 to 469.467, the following terms mean:

(1)"Accounting period", a calendar year unless another twelve-month period is selected by a fiduciary.The term includes a portion of a calendar year or other twelve-month period that begins when an income interest begins or ends when an income interest ends;

(2)"Beneficiary", an heir, legatee and devisee of a decedent's estate, and an income beneficiary and a remainder beneficiary of a trust, including any type of entity that has a beneficial interest in either an estate or a trust;

(3)"Fiduciary", a personal representative, trustee, executor, administrator, successor personal representative, special administrator and any other person performing substantially the same function;

(4)"Income", money or property that a fiduciary receives as current return from a principal asset, including a portion of receipts from a sale, exchange or liquidation of a principal asset, as provided in sections 469.423 to 469.449;

(5)"Income beneficiary", a person to whom net income of a trust is or may be payable;

(6)"Income interest", 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", the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute;

(8)"Net income", if section 469.411 applies to the trust, the unitrust amount, or if section 469.411 does not apply to the trust, the total receipts allocated to income during an accounting period minus the disbursements made from income during the same period, plus or minus transfers pursuant to sections 469.401 to 469.467 to or from income during the same period;

(9)"Person", 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", property held in trust for distribution to a remainder beneficiary when the trust terminates;

(11)"Qualified beneficiary", a beneficiary defined in section 456.1-103;

(12)"Remainder beneficiary", a person entitled to receive principal when an income interest ends;

(13)"Terms of a trust", the manifestation of the settlor's or decedent's intent expressed in a manner which is admissible as proof in a judicial proceeding, whether by written or spoken words or by conduct;

(14)"Trustee", an original, additional or successor trustee, whether or not appointed or confirmed by a court;

(15)"Unitrust amount", net income as defined by section 469.411.

(L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

469.909 - Trustee powers, delegation — agent duties — liability of agent — agent submits to jurisdiction, when.

1.A trustee may delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances.The trustee shall exercise reasonable care, skill, and caution in:

(1)Selecting an agent suitable to the exercise of the delegated function, taking into account the nature and the value of the assets subject to such delegation and the expertise of the agent;

(2)Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust; and

(3)Periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the terms of the delegation.

2.In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation.

3.A trustee who complies with the requirements of subsection 1 of this section is not liable to the beneficiaries or to the trust for the decisions or actions of the agent to whom the function was delegated.

4.By accepting the delegation of a trust function from the trustee of a trust that is subject to the law of this state, an agent submits to the jurisdiction of the courts of this state even if the delegation agreement provides otherwise.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.909

469.405 - Adjustments between principal and income permitted by trustee, factors to be considered — no adjustment permitted, when.

1.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 shall be distributed to a beneficiary by referring to the trust's income, and the trustee determines, after applying subsection 1 of section 469.403, that the trustee is unable to comply with subsection 2 of section 469.403.

2.In deciding whether and to what extent to exercise the power conferred by subsection 1 of this section, a trustee shall consider all factors relevant to the trust and its beneficiaries, including the following factors to the extent 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, including the extent to which such assets consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property, and the extent to which such assets are used by a beneficiary, and whether such assets were purchased by the trustee or received from the settlor;

(6)The net amount allocated to income pursuant to sections 469.401 to 469.467, other than this section, 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.

3.A trustee may not make an adjustment:

(1)That diminishes the income interest in a trust which requires all of the income to be paid at least annually to a spouse 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 to the extent that the existence of the power to adjust would change the character of the amount set aside for federal income, gift or estate tax purposes;

(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 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.

4.If subdivision (5), (6), (7) or (8) of subsection 3 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.

5.A trustee may release the entire power conferred by subsection 1 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 subdivisions (1) to (6) or subdivision (8) of subsection 3 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 3 of this section.The release may be permanent or for a specified period, including a period measured by the life of an individual.

6.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 1 of this section.

(L. 2001 H.B. 241)

469.901 - Trustee duties, settlor may restrict or expand.

1.Except as otherwise provided in subsection 2 of this section, or by other applicable laws, a trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule set forth in this act*.

2.A settlor may expand or restrict the prudent investor rule detailed in this act* by express provisions in the trust instrument.A trustee is not liable to a beneficiary for the trustee's good faith reliance on these express provisions.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.901

*"This act" (H.B. 1432, 1996) contained numerous sections.Consult Disposition of Sections table for a definitive listing.

469.409 - Bar on claim of breach of fiduciary duty, when — applicable rules.

1.Any claim for breach of a trustee's duty to impartially administer a trust related, directly or indirectly, to an adjustment made by a fiduciary to the allocation between principal and income pursuant to subsection 1 of section 469.405 or any allocation made by the fiduciary pursuant to any authority or discretion specified in subsection 1 of section 469.403, unless previously barred by adjudication, consent or other limitation, shall be barred as provided in this section.

(1)Any such claim brought by a qualified beneficiary is barred if not asserted in a judicial proceeding commenced within two years after the trustee has sent a report to that qualified beneficiary that adequately discloses the facts constituting the claim.

(2)Any such claim brought by a beneficiary (other than a qualified beneficiary) with any interest whatsoever in the trust, no matter how remote or contingent, or whether or not the beneficiary is ascertainable or has the capacity to contract, is barred if not asserted in a judicial proceeding commenced within two years after the first to occur of:

(a)The date the trustee sent a report to all qualified beneficiaries that adequately discloses the facts constituting the claim; or

(b)The date the trustee sent a report to a person that represents the beneficiary under the provisions of subdivision (2) of subsection 2 of this section.

2.For purposes of this section the following rules shall apply:

(1)A report adequately discloses the facts constituting a claim if it provides sufficient information so that the beneficiary should know of the claim or reasonably should have inquired into its existence;

(2)Section 469.402 shall apply in determining whether a beneficiary (including a qualified beneficiary) has received notice for purposes of this section;

(3)The determination of the identity of all qualified beneficiaries shall be made on the date the report is deemed to have been sent; and

(4)This section does not preclude an action to recover for fraud or misrepresentation related to the report.

(L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

469.250 - Payment or transfers to fiduciaries or at the direction of the fiduciary, effect on transferor.

A person who in good faith pays or transfers to a fiduciary or to any other person as directed by a fiduciary any money or other property which the fiduciary as such is authorized to receive, is not responsible for the proper application thereof by the fiduciary, and any right or title acquired from the fiduciary in consideration of such payment or transfer is not invalid in consequence of a misapplication by the fiduciary.

(L. 1959 S.B. 121 § 2, A.L. 1991 S.B. 352, A.L. 2004 H.B. 1511)

Effective 7-10-91

Transferred 2004; formerly 456.250

CROSS REFERENCE:

Transfer of corporate securities by fiduciary, rights of corporation or agency, 403.250 to 430.350

469.350 - Short title.

Sections 469.240 to 469.350 may be cited as the "Uniform Fiduciaries Law".

(L. 1959 S.B. 121 § 13, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.350

469.905 - To whom duty owed.

A trustee shall invest and manage the trust assets solely in the interest of the beneficiaries.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.905

469.050 - Separate interests, disclaimers or acceptance.

Each separate interest in property is subject to disclaimer or acceptance and each separate interest, including any specific amount, part, fraction or asset thereof, or formula amount based on present or future facts independent of the disclaimant's volition, is subject to disclaimer or acceptance.

(L. 1997 S.B. 265)

469.421 - Mandatory income interest, undistributed income, paid when.

1.For purposes of this section, the phrase "undistributed income" means net income received before the date on which an income interest ends.The phrase does not include an item of income or expense that is due or accrued, or net income that has been added or is required to be added to principal under the terms of the trust.

2.When a mandatory income interest ends, the trustee shall pay to a mandatory income beneficiary who survives that date, or the estate of a deceased mandatory income beneficiary whose death causes the interest to end, the beneficiary's share of the undistributed income that is not disposed of under the terms of the trust unless the beneficiary has an unqualified power to revoke more than five percent of the trust immediately before the income interest ends.In the latter case, the undistributed income from the portion of the trust that may be revoked shall be added to principal.

3.When a trustee's obligation to pay a fixed annuity or a fixed fraction of the value of the trust's assets ends, the trustee shall prorate the final payment if and to the extent required by applicable law to accomplish a purpose of the trust or its settlor relating to income, gift, estate or other tax requirements.

(L. 2001 H.B. 241)

469.425 - Allocations to income or principal.

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 an interest other than a purchased interest, and shall allocate to principal an amount received as a distribution of principal from such a trust or estate.If a trustee purchases an interest in a trust that is an investment entity, or a decedent or donor transfers an interest in such a trust to a trustee, section 469.423 or 469.449 shall apply to a receipt from the trust.

(L. 2001 H.B. 241)

469.070 - Contingent interests.

A contingent future interest may be disclaimed in whole or in part under the provisions of this chapter at any time before, or within nine months after, beneficiaries of the interest have been fully ascertained and their interests vested.A vested interest subject to defeasance or divestment shall be deemed a contingent interest for purposes of this chapter.

(L. 1997 S.B. 265)

469.270 - Check drawn by fiduciary payable to third person.

If a check or other bill of exchange is drawn by a fiduciary as such, or in the name of his principal by a fiduciary empowered to draw such instrument in the name of his principal, the payee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in drawing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that this action in taking the instrument amounts to bad faith.If, however, such instrument is payable to a personal creditor of the fiduciary and delivered to the creditor in payment of or as security for a personal debt of the fiduciary to the actual knowledge of the creditor, or is drawn and delivered in any transaction known by the payee to be for the personal benefit of the fiduciary, the creditor or other payee is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the instrument.

(L. 1959 S.B. 121 § 5, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.270

469.429 - Allocations to principal.

A trustee shall allocate to principal:

(1)To the extent not allocated to income pursuant to sections 469.401 to 469.467, assets received from a transferor during the transferor's lifetime, a decedent's estate, a trust with a terminating income interest, or a payer under a contract naming the trust or its trustee as beneficiary;

(2)Money or other property received from the sale, exchange, liquidation or change in form of a principal asset, including realized profit, subject to sections 469.423 to 469.467;

(3)Amounts recovered from third parties to reimburse the trust because of disbursements described in subdivision (7) of subsection 1 of section 469.453 or for other reasons to the extent not based on the loss of income;

(4)Proceeds of property taken by eminent domain, but a separate award made for the loss of income with respect to an accounting period during which a current income beneficiary had a mandatory income interest is income;

(5)Net income received in an accounting period during which there is no beneficiary to whom a trustee may or shall distribute income; and

(6)Other receipts as provided in sections 469.435 to 469.449.

(L. 2001 H.B. 241)

469.260 - Transfer of negotiable instrument by fiduciary.

If any negotiable instrument payable or endorsed to a fiduciary as such is endorsed by the fiduciary, or if any negotiable instrument payable or endorsed to his principal is endorsed by a fiduciary empowered to endorse such instrument on behalf of his principal, the endorsee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in endorsing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith.If, however, such instrument is transferred by the fiduciary in payment of or as security for a personal debt of the fiduciary to the actual knowledge of the creditor, or is transferred in any transaction known by the transferee to be for the personal benefit of the fiduciary, the creditor or other transferee is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in transferring the instrument.

(L. 1959 S.B. 121 § 4, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.260

469.439 - Ten percent of receipts from liquidating asset allocated to income, remainder to principal.

1.As used in this section, the phrase "liquidating asset" means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a period of limited duration.The phrase includes a leasehold, patent, copyright, royalty right, and right to receive payments during a period of more than one year under an arrangement that does not provide for the payment of interest on the unpaid balance.The phrase does not include a payment subject to section 469.437, resources subject to section 469.441, timber subject to section 469.443, an activity subject to section 469.447, an asset subject to section 469.449, or any asset for which the trustee establishes a reserve for depreciation pursuant to section 469.455.

2.A trustee shall allocate to income ten percent of the receipts from a liquidating asset and the balance to principal.

(L. 2001 H.B. 241)

469.431 - Rental property, allocation to income.

To the extent that a trustee accounts for receipts from rental property pursuant to this section, the trustee shall allocate to income an amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease.An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for future periods, shall be added to principal and held subject to the terms of the lease and is not available for distribution to a beneficiary until the trustee's contractual obligations have been satisfied with respect to that amount.

(L. 2001 H.B. 241)

469.435 - Insubstantial amounts may be allocated to principal, exceptions — presumption of insubstantial amount, when.

If a trustee determines that an allocation between principal and income required by section 469.437, 469.439, 469.441, 469.443 or 469.449 is insubstantial, the trustee may allocate the entire amount to principal unless one of the circumstances described in subsection 3 of section 469.405 applies to the allocation.This power may be exercised by a cotrustee in the circumstances described in subsection 4 of section 469.405 and may be released for the reasons and in the manner described in subsection 5 of section 469.405.An allocation is presumed to be insubstantial if:

(1)The amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than ten percent; or

(2)The value of the asset producing the receipt for which the allocation would be made is less than ten percent of the total value of the trust's assets at the beginning of the accounting period.

(L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

469.427 - Separate accounting records maintained, when, procedure.

1.If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account separately for the business or activity instead of accounting for it as part of the trust's general accounting records, the trustee may maintain separate accounting records for its transactions, whether or not its assets are segregated from other trust assets.

2.A trustee who accounts separately for a business or other activity may determine the extent to which net cash receipts shall be retained for working capital, the acquisition or replacement of fixed assets, and other reasonably foreseeable needs of the business or activity, and the extent to which the remaining net cash receipts are accounted for as principal or income in the trust's general accounting records.If a trustee sells assets of the business or other activity, other than in the ordinary course of the business or activity, the trustee shall account for the net amount received as principal in the trust's general accounting records to the extent the trustee determines that the amount received is no longer required in the conduct of the business.

3.Activities for which a trustee may maintain separate accounting records include:

(1)Retail, manufacturing, service and other traditional business activities;

(2)Farming;

(3)Raising and selling livestock and other animals;

(4)Management of rental properties;

(5)Extraction of minerals and other natural resources;

(6)Timber operations; and

(7)Activities to which section 469.447 applies.

(L. 2001 H.B. 241)

469.423 - Allocations by trustee — entity defined.

1.For purposes of this section, the term "entity" means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund, or any other organization in which a trustee has an interest, other than a trust or estate to which section 469.425 applies, a business or activity to which section 469.427 applies, or an asset-backed security to which section 469.449 applies.

2.Except as otherwise provided in this section, a trustee shall allocate to income money received from an entity.

3.A trustee shall allocate the following receipts from an entity to principal:

(1)Property other than money;

(2)Money received in one distribution or a series of related distributions in exchange for part or all of a trust's interest in the entity;

(3)Money received in total or partial liquidation of the entity; and

(4)Money received from an entity that is a regulated investment company or a real estate investment trust if the money distributed is a capital gain dividend for federal income tax purposes.

4.Money is received in partial liquidation:

(1)To the extent that the entity, at or near the time of a distribution, indicates that such money is a distribution in partial liquidation; or

(2)If the total amount of money and property received in a distribution or series of related distributions is greater than twenty percent of the entity's gross assets, as shown by the entity's year-end financial statements immediately preceding the initial receipt.

5.Money is not received in partial liquidation, nor may it be taken into account pursuant to subdivision (2) of subsection 4 of this section, to the extent that such money does not exceed the amount of income tax that a trustee or beneficiary shall pay on taxable income of the entity that distributes the money.

6.A trustee may rely upon a statement made by an entity about the source or character of a distribution if the statement is made at or near the time of distribution by the entity's board of directors or other person or group of persons authorized to exercise powers to pay money or transfer property comparable to those of a corporation's board of directors.

(L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

469.437 - Distributions allocated as income, when — definitions — balance allocated to principal, when — effect of separate accounts or funds — marital deduction, effect of.

1.As used in this section, the following terms mean:

(1)"Payment", an amount that is:

(a)Received or withdrawn from a plan; or

(b)One of a series of distributions that have been or will be received over a fixed number of years or during the life of one or more individuals under any contractual or other arrangement, or is a single payment from a plan that the trustee could have received over a fixed number of years or during the life of one or more individuals;

(2)"Plan", a contractual, custodial, trust or other arrangement that provides for distributions to the trust, including, but not limited to, qualified retirement plans, Individual Retirement Accounts, Roth Individual Retirement Accounts, public and private annuities, and deferred compensation, including payments received directly from an entity as defined in section 469.423 regardless of whether or not such distributions are made from a specific fund or account.

2.If any portion of a payment is characterized as a distribution to the trustee of interest, dividends or a dividend equivalent, the trustee shall allocate the portion so characterized to income.The trustee shall allocate the balance of that payment to principal.

3.If no part of a payment is allocated to income pursuant to subsection 2 of this section, then for each accounting period of the trust that any payment is received by the trust with respect to the trust's interest in a plan, the trustee shall allocate to income that portion of the aggregate value of all payments received by the trustee in that accounting period equal to the amount of plan income attributable to the trust's interest in the plan for that calendar year.The trustee shall allocate the balance of that payment to principal.

4.For purposes of this section, if a payment is received from a plan that maintains a separate account or fund for its participants or account holders, including, but not limited to, defined contribution retirement plans, Individual Retirement Accounts, Roth Individual Retirement Accounts, and some types of deferred compensation plans, the phrase "plan income" shall mean either the amount of the plan account or fund held for the benefit of the trust that, if the plan account or fund were a trust, would be allocated to income pursuant to sections 469.401 to 469.467 for that accounting period, or four percent of the value of the plan account or fund on the first day of that accounting period.The method of determining plan income pursuant to this subsection shall be chosen by the trustee in the trustee's discretion.The trustees may change the method of determining plan income pursuant to this subsection for any future accounting period.

5.For purposes of this section if the payment is received from a plan that does not maintain a separate account or fund for its participants or account holders, including by way of example and not limitation defined benefit retirement plans and some types of deferred compensation plans, the term "plan income" shall mean four percent of the total present value of the trust's interest in the plan as of the first day of the accounting period, based on reasonable actuarial assumptions as determined by the trustee.

6.Notwithstanding subsections 1 to 5 of this section, with respect to a trust where an election to qualify for a marital deduction under Section 2056(b)(7) or Section 2523(f) of the Internal Revenue Code of 1986, as amended, has been made, or a trust that qualified for the marital deduction under either Section 2056(b)(5) or Section 2523(e) of the Internal Revenue Code of 1986, as amended, a trustee shall determine the plan income for the accounting period as if the plan were a trust subject to sections 469.401 to 469.467.Upon request of the surviving spouse, the trustee shall demand that the person administering the plan distribute the plan income to the trust.The trustee shall allocate a payment from the plan to income to the extent of the plan income and distribute that amount to the surviving spouse.The trustee shall allocate the balance of the payment to principal.Upon request of the surviving spouse, the trustee shall allocate principal to income to the extent the plan income exceeds payments made from the plan to the trust during the accounting period.

7.If, to obtain an estate or gift tax marital deduction for a trust, a trustee shall allocate more of a payment to income than provided for by this section, the trustee shall allocate to income the additional amount necessary to obtain the marital deduction.

(L. 2001 H.B. 241, A.L. 2011 S.B. 59)

469.433 - Life insurance proceeds allocated to principal — dividends allocated to income.

1.Except as otherwise provided in subsection 2 of this section, a trustee shall allocate to principal the proceeds of a life insurance policy or other contract in which the trust or its trustee is named as beneficiary, including a contract that insures the trust or its trustee against loss for damage to, destruction of, or loss of title to a trust asset.The trustee shall allocate dividends on an insurance policy to income if the premiums on the policy are paid from income, and to principal if the premiums are paid from principal.

2.A trustee shall allocate to income proceeds of a contract that insures the trustee against loss of occupancy or other use by an income beneficiary, loss of income, or, subject to section 469.427, loss of profits from a business.

3.This section does not apply to a contract to which section 469.437 applies.

(L. 2001 H.B. 241)

469.417 - Beneficiary entitled to net income, when — asset subject to trust, when — income interest.

1.An income beneficiary is entitled to net income from the date on which the income interest begins.An 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 a trust or successive income interest.

2.An asset becomes subject to a trust:

(1)On the date it is transferred to the trust in the case of an asset that is transferred to a trust during the transferor's life;

(2)On the date of a testator's death in the case of an asset that becomes subject to a trust by reason of a will, even if there is an intervening period of administration of the testator's estate; or

(3)On the date of an individual's death in the case of an asset that is transferred to a fiduciary by a third party because of the individual's death.

3.An asset becomes subject to a successive income interest on the day after the preceding income interest ends, as determined pursuant to subsection 4 of this section, even if there is an intervening period of administration to wind up the preceding income interest.

4.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 whom a trustee may distribute income.

(L. 2001 H.B. 241)

469.413 - Death of decedent or end of income interest, applicable rules.

After a decedent dies, in the case of an estate, or after an income interest in a trust ends, the following rules apply:

(1)A fiduciary of an estate or of a terminating income interest shall determine the amount of net income and net principal receipts received from property specifically given to a beneficiary pursuant to the rules in sections 469.417 to 469.461 which apply to trustees and the rules in subdivision (5) of this section.The fiduciary shall distribute the net income and net principal receipts to the beneficiary who is to receive the specific property;

(2)A fiduciary shall determine the remaining net income of a decedent's estate or a terminating income interest pursuant to the rules in sections 469.417 to 469.461 which apply to trustees and by:

(a)Including in net income all income from property used to discharge liabilities;

(b)Paying from income or principal, in the fiduciary's discretion, fees of attorneys, accountants and fiduciaries; court costs and other expenses of administration; and interest on death taxes, but the fiduciary may pay those expenses from income of property passing to a trust for which the fiduciary claims an estate tax marital or charitable deduction only to the extent that the payment of those expenses from income will not cause the reduction or loss of the deduction; and

(c)Paying from principal all other disbursements made or incurred in connection with the settlement of a decedent's estate or the winding up of a terminating income interest, including debts, funeral expenses, disposition of remains, family allowances, and death taxes and related penalties that are apportioned to the estate or terminating income interest by the will, the terms of the trust, or applicable law;

(3)A fiduciary shall distribute to a beneficiary who receives a pecuniary amount outright the interest or any other amount provided by the will, the terms of the trust, or in the absence of any such provisions, the provisions of section 473.633, from net income determined pursuant to subdivision (2) of this section or from principal to the extent that net income is insufficient.If a beneficiary is to receive a pecuniary amount outright from a trust after an income interest ends and no interest or other amount is provided for by the terms of the trust or applicable law, the fiduciary shall distribute the interest or other amount to which the beneficiary would be entitled under applicable law if the pecuniary amount were required to be paid under a will;

(4)A fiduciary shall distribute the net income remaining after distributions required by subdivision (3) of this section in the manner described in section 469.415 to all other beneficiaries, including a beneficiary who receives a pecuniary amount in trust, even if the beneficiary holds an unqualified power to withdraw assets from the trust or other presently exercisable general power of appointment over the trust;

(5)A fiduciary may not reduce principal or income receipts from property described in subdivision (1) of this section because of a payment described in sections 469.451 and 469.453 to the extent that the will, the terms of the trust, or applicable law requires the fiduciary to make the payment from assets other than the property or to the extent that the fiduciary recovers or expects to recover the payment from a third party.The net income and principal receipts from the property are determined by including all of the amounts the fiduciary receives or pays with respect to the property, whether those amounts accrued or became due before, on or after the date of a decedent's death or an income interest's terminating event, and by making a reasonable provision for amounts that the fiduciary believes the estate or terminating income interest may become obligated to pay after the property is distributed.

(L. 2001 H.B. 241)

469.913 - Specific statutory standards to control.

The general assembly recognizes that persons, corporations, entities or state agencies who have responsibility for investing funds may be subject to a standard that is specifically set forth in other statutes.Under such circumstances, such persons, corporations, entities or state agencies shall comply with the standard of investment set forth in the other statute, and this act* shall not modify or repeal that standard.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.913

*"This act" (H.B. 1432, 1996) contained numerous sections.Consult Disposition of Sections table for a definitive listing.

469.907 - Restriction on costs.

In investing and managing trust assets, a trustee may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the trustee.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.907

469.903 - Diversification required, exception.

A trustee shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.903

469.403 - Disbursements to or between principal and income, fiduciary's responsibilities.

1.In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of sections 469.413 to 469.421, a fiduciary:

(1)Shall administer a trust or estate under the terms of the trust or the will, even if there is a different provision in sections 469.401 to 469.467;

(2)May administer a trust or estate by exercising 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 sections 469.401 to 469.467;

(3)Shall administer a trust or estate pursuant to sections 469.401 to 469.467 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 sections 469.401 to 469.467 do not provide a rule for allocating the receipt or disbursement to or between principal and income.

2.In exercising the power to adjust pursuant to section 469.405 or a discretionary power of administration regarding a matter within the scope of sections 469.401 to 469.467, whether granted by the terms of a trust, a will, or sections 469.401 to 469.467, 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 intent that the fiduciary shall or may favor one or more of the beneficiaries.A determination in accordance with sections 469.401 to 469.467 is presumed to be fair and reasonable to all of the beneficiaries.

(L. 2001 H.B. 241)

469.453 - Required disbursements from principal.

1.A trustee shall make the following disbursements from principal:

(1)The remaining one-half of the disbursements described in subdivisions (1) and (2) of section 469.451;

(2)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 or other matter that concerns primarily an interest in principal;

(5)Premiums paid on a policy of insurance not described in subdivision (4) of section 469.451 of which the trust is the owner and beneficiary;

(6)Estate, inheritance and other transfer taxes, including penalties, apportioned to the trust; and

(7)Extraordinary expenses incurred in connection with the management and preservation of trust property;

(8)Expenses for a capital improvement to a principal asset, whether in the form of changes to an existing asset or the construction of a new asset, including special assessments; and

(9)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.

2.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.

(L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

469.902 - Trustee duties and powers — decisions to be evaluated in context of trust.

1.A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust.In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.

2.A trustee's investment and management decisions respecting individual assets and courses of action must be evaluated not in isolation but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust.

3.When investing and managing trust assets, a trustee shall consider the following as are relevant to the trust or its beneficiaries:

(1)General economic conditions;

(2)The possible effect of inflation or deflation;

(3)The expected tax consequences of investment decisions or strategies;

(4)The role that each investment or course of action plays within the overall trust portfolio;

(5)The expected total return from income and the appreciation of capital;

(6)Other resources of the beneficiaries known to the trustee;

(7)Needs for liquidity, regularity of income, and preservation or appreciation of capital;

(8)An asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries; and

(9)The size of the portfolio, nature and estimated duration of the fiduciary relationship and distribution requirements under the governing instrument.

4.A trustee shall make a reasonable effort to ascertain facts relevant to the investment and management of trust assets.

5.A trustee may invest in any kind of property or type of investment consistent with the standards of this act*.

6.A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee's representation that the trustee has special skills or expertise, has a duty to use those special skills or expertise when investing and managing trust assets.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.902

*"This act" (H.B. 1432, 1996) contained numerous sections.Consult Disposition of Sections table for a definitive listing.

469.906 - Multiple beneficiaries, duty owed to whom.

If a trust has two or more beneficiaries, the trustee shall act impartially in investing and managing the trust assets, taking into account any differing interests of the beneficiaries.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.906

469.457 - Principal disbursement, permitted transfers.

1.If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.

2.Principal disbursements to which subsection 1 of this section applies include the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a third party:

(1)An amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs;

(2)Disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and broker's commissions;

(3)Periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments; and

(4)Disbursements described in subdivision (7) of subsection 1 of section 469.453.

3.If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in subsection 1 of this section.

(L. 2001 H.B. 241)

469.402 - Applicability.

The provisions of sections 456.3-301 to 456.3-305 shall apply to sections 469.401 to 469.467 for all purposes.

(L. 2004 H.B. 1511)

469.443 - Sale of timber and related products, allocation of net receipts.

1.To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee shall allocate the net receipts:

(1)To income to the extent that the amount of timber removed from the land does not exceed the rate of growth of the timber during the accounting periods in which a beneficiary has a mandatory income interest;

(2)To principal to the extent that the amount of timber removed from the land exceeds the rate of growth of the timber or the net receipts are from the sale of standing timber;

(3)To or between income and principal if the net receipts are from the lease of timberland or from a contract to cut timber from land owned by a trust, by determining the amount of timber removed from the land under the lease or contract and applying the rules in subdivisions (1) and (2) of this subsection; or

(4)To principal to the extent that advance payments, bonuses and other payments are not allocated pursuant to either subdivision (1), (2) or (3) of this subsection.

2.In determining net receipts to be allocated pursuant to subsection 1 of this section, a trustee shall deduct and transfer to principal a reasonable amount for depletion.

3.Sections 469.401 to 469.467 apply whether or not a decedent or transferor was harvesting timber from the property before it became subject to the trust.

4.If a trust owns an interest in timberland on August 28, 2001, the trustee may allocate net receipts from the sale of timber and related products as provided in sections 469.401 to 469.467 or in the manner used by the trustee before August 28, 2001.If the trust acquires an interest in timberland after August 28, 2001, the trustee shall allocate net receipts from the sale of timber and related products as provided in sections 469.401 to 469.467.

(L. 2001 H.B. 241)

469.912 - Interpretation of certain sections.

This act* shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this act** among the states enacting it.

(L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.912

*"This act" (H.B. 1432, 1996) contained numerous sections.Consult Disposition of Sections table for a definitive listing.

469.447 - Transactions in derivatives allocated to principal — options to sell or buy property allocated to principal.

1.As used in this section, the term "derivative" means a contract or financial instrument or a combination of contracts and financial instruments which gives a trust the right or obligation to participate in some or all changes in the price of a tangible or intangible asset or group of assets, or changes in a rate, an index of prices or rates, or other market indicator for an asset or a group of assets.

2.To the extent that a trustee does not account pursuant to section 469.427 for transactions in derivatives, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions.

3.If a trustee grants an option to buy property from the trust, whether or not the trust owns the property when the option is granted, grants an option that permits another person to sell property to the trust, or acquires an option to buy property for the trust or an option to sell an asset owned by the trust, and the trustee or other owner of the asset is required to deliver the asset if the option is exercised, an amount received for granting the option shall be allocated to principal.An amount paid to acquire the option shall be paid from principal.A gain or loss realized upon the exercise of an option, including an option granted to a settlor of the trust for services rendered, shall be allocated to principal.

(L. 2001 H.B. 241)

469.432 - Interest allocated to income — amounts received from sale, redemption or disposition of an obligation to pay money to principal.

1.An amount received as interest, whether determined at a fixed, variable or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, shall be allocated to income without any provision for amortization of premium.

2.A trustee shall allocate to principal an amount received from the sale, redemption or other disposition of an obligation to pay money to the trustee more than one year after it is purchased or acquired by the trustee, including an obligation whose purchase price or value when it is acquired is less than its value at maturity.If the obligation matures within one year after it is purchased or acquired by the trustee, an amount received in excess of its purchase price or its value when acquired by the trust shall be allocated to income.

3.This section does not apply to an obligation to which section 469.437, 469.439, 469.441, 469.443, 469.447 or 469.449 applies.

(L. 2001 H.B. 241)

469.280 - Check drawn by and payable to fiduciary.

If a check or other bill of exchange is drawn by a fiduciary as such or in the name of his principal by a fiduciary empowered to draw such instrument in the name of his principal, payable to the fiduciary personally, or payable to a third person and by him transferred to the fiduciary, and is thereafter transferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in transferring the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith.

(L. 1959 S.B. 121 § 6, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.280

469.463 - Uniformity considered in application and construction.

In applying and construing sections 469.401 to 469.467, consideration shall be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

(L. 2001 H.B. 241)

469.080 - Per stirpes transfers.

In the case of a per stirpes distribution or vesting, either under an instrument or by operation of law, a prior or subsequent disclaimer by an individual living at the time of the transfer or vesting does not change the stocks that are to be used as the basis of the division between beneficiaries of succeeding generations.

(L. 1997 S.B. 265)

469.467 - Applicability of sections.

Sections 469.401 to 469.467 apply to every trust or decedent's estate existing on or after August 28, 2001, except as otherwise expressly provided in the will or terms of the trust or in sections 469.401 to 469.467.

(L. 2001 H.B. 241, A.L. 2016 H.B. 1765)

469.290 - Deposit in name of fiduciary as such.

If a deposit is made in a bank to the credit of a fiduciary as such, the bank is authorized to pay the amount of the deposit or any part thereof upon the check of the fiduciary, signed with the name in which such deposit is entered, without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing the check or with knowledge of such facts that its action in paying the check amounts to bad faith.If, however, such a check is payable to the drawee bank and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the check.

(L. 1959 S.B. 121 § 7, A.L. 2004 H.B. 1511)

Transferred 2004; formerly 456.290

469.090 - Special rules for interests under old transfers.

The following rules set forth in subdivisions (1) and (2) of this section shall apply in the case of a vested interest or vested future interest created by a transfer made before 1977, and may apply in such case to lengthen, but shall not shorten, the time for disclaimer otherwise available:

(1)Such interest is subject to disclaimer in whole or in part for a reasonable time after the disclaimant has knowledge of the existence of the transfer;

(2)If the interest has vested before the disclaimant's eighteenth birthday, and the disclaimant has knowledge of the existence of the transfer before the disclaimant's eighteenth birthday, such interest is subject to disclaimer in whole or in part until a reasonable time elapses after the disclaimant's eighteenth birthday, except that a written acceptance by the disclaimant's representative shall constitute an acceptance of any portion of the interest.