Michigan Laws 555.815 – Asset-backed security; allocation of payments
Current as of: 2024 | Check for updates
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(1) As used in this section, “asset-backed security” means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financial assets that provide collateral for the security. Asset-backed security 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. Asset-backed security does not include an asset to which section 401 or 409 applies.
(2) If a trust receives a payment from interest or other current return and from other proceeds of the collateral financial assets of an asset-backed security, the trustee shall allocate to income the portion of the payment that the payer identifies as being from interest or other current return and shall allocate the balance of the payment to principal.
Terms Used In Michigan Laws 555.815
- Accounting period: means a calendar year unless another 12-month period is selected by a fiduciary. See Michigan Laws 555.502
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Income: means money or property that a fiduciary receives as current return from a principal asset. See Michigan Laws 555.502
- Principal: means property held in trust for distribution to a remainder beneficiary when the trust terminates. See Michigan Laws 555.502
- 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 Michigan Laws 555.502
(3) If a trust receives 1 or more payments in exchange for the trust’s entire interest in an asset-backed security in 1 accounting period, the trustee shall allocate the payments to principal. If a payment is 1 of a series of payments that will result in the liquidation of the trust’s interest in the security over more than 1 accounting period, the trustee shall allocate 10% of the payment to income and the balance to principal.