(1) A fiduciary may make an adjustment between income and principal to offset the shifting of economic interests or tax benefits between current income beneficiaries and successor beneficiaries that arises from:

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Terms Used In Utah Code 75A-5-507

  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • Beneficiary: includes :
         (3)(a) for a trust:
              (3)(a)(i) a current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal;
              (3)(a)(ii) a remainder beneficiary; and
              (3)(a)(iii) any other successor beneficiary;
         (3)(b) for an estate, an heir and devisee; and
         (3)(c) for a life estate or term interest, a person that holds a life estate, term interest, or remainder, or other interest following a life estate or term interest. See Utah Code 75A-5-102
  • Distribution: means a payment or transfer by a fiduciary to a beneficiary in the beneficiary's capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiary's right to receive the payment or transfer under the terms of the trust. See Utah Code 75A-5-102
  • Equal: means , with respect to biological sex, of the same value. See Utah Code 68-3-12.5
  • Estate: includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration. See Utah Code 75A-5-102
  • Fiduciary: A trustee, executor, or administrator.
  • Fiduciary: includes :
         (8)(a) a trustee, trust director as defined in Section 75-12-102, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary;
         (8)(b) a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal; and
         (8)(c) if there are two or more co-fiduciaries, all co-fiduciaries acting under the terms of the trust and applicable law. See Utah Code 75A-5-102
  • Income: includes a part of receipts from a sale, exchange, or liquidation of a principal asset to the extent provided in Part 4, Allocation of Receipts. See Utah Code 75A-5-102
  • Principal: means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary. See Utah Code 75A-5-102
     (1)(a) an election or decision the fiduciary makes regarding a tax matter, other than a decision to claim an income tax deduction to which Subsection (2) applies;
     (1)(b) an income tax or other tax imposed on the fiduciary or a beneficiary as a result of a transaction involving the fiduciary or a distribution by the fiduciary; or
     (1)(c) ownership by the fiduciary of an interest in an entity, a part of whose taxable income, regardless of whether the taxable income is distributed, is includable in the taxable income of the fiduciary or a beneficiary.
(2)

     (2)(a) If the amount of an estate tax marital or charitable deduction is reduced because a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting the amount for estate tax purposes and, as a result, estate taxes paid from principal are increased and income taxes paid by the fiduciary or a beneficiary are decreased, the fiduciary shall charge each beneficiary that benefits from the decrease in income tax to reimburse the principal from which the increase in estate tax is paid.
     (2)(b) The total reimbursement must equal the increase in the estate tax, to the extent that the principal used to pay the increase would have qualified for a marital or charitable deduction but for the payment.
     (2)(c) The share of the reimbursement for each fiduciary or beneficiary whose income taxes are reduced shall be the same as the fiduciary’s or beneficiary’s share of the total decrease in income tax.
(3) A fiduciary that charges a beneficiary under Subsection (2) may offset the charge by obtaining payment from the beneficiary, withholding an amount from future distributions to the beneficiary, or adopting another method or combination of methods.

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