Sec. 36. (a) As used in this section, “derivative” means a contract or financial instrument or a combination of contracts and financial instruments that gives a trust the right or obligation to participate in:

(1) some or all changes in the price of a tangible or intangible asset or group of assets; or

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Terms Used In Indiana Code 30-2-14-36

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Contract: A legal written agreement that becomes binding when signed.
  • 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.
  • person: means 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. See Indiana Code 30-2-14-9
  • 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
  • Property: includes personal and real property. See Indiana Code 1-1-4-5
  • 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
(2) changes in a rate, an index of prices or rates, or other market indicator for an asset or a group of assets.

     (b) To the extent that a trustee does not account under section 25 of this chapter for transactions in derivatives, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions.

     (c) If a trustee:

(1) grants an option to buy property from the trust, whether or not the trust owns the property when the option is granted;

(2) grants an option that permits another person to sell property to the trust; or

(3) 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 must be allocated to principal. An amount paid to acquire the option must 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, must be allocated to principal.

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

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