Virginia Code 64.2-1075: Apportionment when income interest ends.
A. As used in this section, “undistributed income” means net income received on or before the date on which an income interest ends. “Undistributed income” 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.
Terms Used In Virginia Code 64.2-1075
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- 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 :
1. See Virginia Code 64.2-1033
- 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 Virginia Code 64.2-1033
- Fiduciary: A trustee, executor, or administrator.
- Fiduciary: includes a trustee, trust director under the Uniform Directed Trust Act (§ Virginia Code 64.2-1033
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- Income: includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Articles 4 (§ Virginia Code 64.2-1033
- 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 held in trust for distribution to, production of income for, or use by a current or successor beneficiary. See Virginia Code 64.2-1033
- Trust: includes all trusts described in § Virginia Code 64.2-1033
B. Except as otherwise provided in subsection C, when a mandatory income interest of a beneficiary ends, the fiduciary shall pay the beneficiary‘s share of the undistributed income that is not disposed of under the terms of the trust to the beneficiary or, if the beneficiary does not survive the date the interest ends, to the beneficiary’s estate.
C. If a beneficiary has an unqualified power to withdraw more than five percent of the value of a trust immediately before an income interest ends:
1. The fiduciary shall allocate to principal the undistributed income from the portion of the trust which may be withdrawn; and
2. Subsection B applies only to the balance of the undistributed income.
D. When a fiduciary’s obligation to pay a fixed annuity or a fixed fraction of the value of assets ends, the fiduciary shall prorate the final payment as required to preserve an income tax, gift tax, estate tax, or other tax benefit.
2022, c. 354.