Sec. 28. (a) An amount received as interest, whether determined at a fixed, variable, or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, must be allocated to income without any provision for amortization of premium.

will 560x170

Ask a will, trust or estate question, get an answer ASAP!
Thousands of highly rated, verified estate & trust lawyers.
Click here to chat with a lawyer about your rights.

Terms Used In Indiana Code 30-2-14-28

  • Amortization: Paying off a loan by regular installments.
  • 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 , in the case of:

    Indiana Code 30-2-14-2

  • income: means money or property that a fiduciary receives as current return from a principal asset. See Indiana Code 30-2-14-4
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • principal: means property that is held in trust for distribution to a remainder beneficiary when the trust terminates or that will remain perpetually vested in the trustee. See Indiana Code 30-2-14-10
  • Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
  • Trustee: A person or institution holding and administering property in trust.
  • trustee: includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court. See Indiana Code 30-2-14-13
  • Year: means a calendar year, unless otherwise expressed. See Indiana Code 1-1-4-5
     (b) 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 (1) 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 (1) 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 must be allocated to income.

     (c) Notwithstanding any other provision of this section, when an obligation described in this section is held as an asset of a charitable remainder trust, an increase in the value of the obligation over the value of the obligation at the time of acquisition by the trust is distributable as income. For purposes of this subsection, the increase in value is available for distribution only when the trustee receives cash on account of the obligation. If the obligation is surrendered or liquidated partially, the cash available shall be attributed first to the increase. The increase is distributable to the income beneficiary who is the income beneficiary at the time the cash is received.

     (d) This section does not apply to an obligation to which section 31, 32, 33, 34, 36, or 37 of this chapter applies.

As added by P.L.84-2002, SEC.2.

  Previous section
Next section  
 Chapter 14 Contents