KRS § 386.456 — KY Code / Title XXXIII / Chapter 386 / Section 386.456
386.456 Determination and distribution of net income
Status: in_force

386.456 Determination and distribution of net income.

After a decedent dies, in the case of an estate, or after an income interest in a trust ends,

the following rules apply:

(1) A fiduciary of an estate or of a terminating income interest shall determine the

amount of net income and net principal receipts received from property specifically

given to a beneficiary under the rules in Articles 3, 4, and 5 of the Kentucky

Principal and Income Act that apply to trustees and the rules in subsection (5) of

this section. The fiduciary shall distribute the net income and net principal receipts

to the beneficiary who is to receive the specific property.

(2) A fiduciary shall determine the remaining net income of a decedent's estate or a

terminating income interest under the rules in Articles 3, 4, and 5 of the Kentucky

Principal and Income Act that apply to trustees and by:

(a) Including in net income all income from property used to discharge liabilities;

(b) Paying from income or principal, in the fiduciary's discretion, fees to

attorneys, accountants, and fiduciaries; court costs and other expenses of

administration; and interest on death taxes, but the fiduciary may pay those

expenses from income of property passing to a trust for which the fiduciary

claims an estate tax marital or charitable deduction only to the extent that the

payment of those expenses from income will not cause the reduction or loss of

the deduction; and

(c) Paying from principal all other disbursements made or incurred in connection

with the settlement of a decedent's estate or the winding up of a terminating

income interest, including debts, funeral expenses, disposition of remains,

family allowances, and death taxes and related penalties that are apportioned

to the estate or terminating income interest by the will, the terms of the trust,

or applicable law.

(3) A fiduciary shall distribute to a beneficiary who receives a pecuniary amount

outright the interest or any other amount provided by the will, the terms of the trust,

or applicable law from net income determined under subsection (2) of this section,

or from principal to the extent that net income is insufficient. If a beneficiary is to

receive a pecuniary amount outright from a trust after an income interest ends and

no interest or other amount is provided for by the terms of the trust or applicable

law, the fiduciary shall distribute the interest or other amount to which the

beneficiary would be entitled under applicable law if the pecuniary amount were

required to be paid under a will.

(4) A fiduciary shall distribute the net income remaining after distributions required by

subsection (3) of this section in the manner described in KRS 386.458 to all other

beneficiaries, including a beneficiary who receives a pecuniary amount in trust,

even if the beneficiary holds an unqualified power to withdraw assets from the trust

or other presently exercisable general power of appointment over the trust.

(5) A fiduciary shall not reduce principal or income receipts from property described in

subsection (1) of this section because of a payment described in KRS 386.490 to the

extent that the will, the terms of the trust, or applicable law requires the fiduciary to

make the payment from assets other than the property or to the extent that the

fiduciary recovers or expects to recover the payment from a third party. The net

income and principal receipts from the property are determined by including all of

the amounts the fiduciary receives or pays with respect to the property, whether

those amounts accrued or became due before, on, or after the date of a decedent's

death or an income interest's terminating event, and by making a reasonable

provision for amounts that the fiduciary believes the estate or terminating income

interest may become obligated to pay after the property is distributed.