2023 New York Laws › EPT - Estates, Powers and Trusts › Article 11-A - Uniform Principal and Income Act › Part 2 - Decedent's Estate or Terminating Income Interest › 11-A-2.1 - Determination and Distribution of Net Income

§ 11-A-2.1 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
parts 3 through 5 which apply to trustees and  the  rules  in  paragraph
(5).  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
parts 3 through 5 which 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  of  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) Unless otherwise provided by the  terms  of  the  will  or  trust,
commencing  (A) seven months from either the date of death or other date
a beneficiary is to receive a pecuniary amount outright if  letters  are
not  required, unless the beneficiary is a genetic child, then such date
shall  be  the  later  of  the  aforementioned  time  periods  in   this
subparagraph  or  the  date  of  birth  of the genetic child entitled to
inherit from the child's genetic parent  under  section  4-1.3  of  this
chapter,   or   (B)  seven  months  from  the  time  letters,  including
preliminary or temporary letters, are granted if letters  are  required,
unless  the  beneficiary is a genetic child, then such date shall be the
later of the aforementioned time period in this subparagraph or the date
of birth of the genetic child  entitled  to  inherit  from  the  child's
genetic  parent  under  section 4-1.3 of this chapter, a fiduciary shall
distribute income to a  beneficiary  who  receives  a  pecuniary  amount
outright,  from  net  income  determined  under  paragraph  (2)  or from
principal to the extent that net income is insufficient,  of  an  amount
equal  to  the  pecuniary  amount  multiplied by an income factor, which
shall be set (or reset) on the first business day of each calendar  year
and  fixed  for  that  calendar year at the target Federal funds rate as
announced by the Federal Reserve Board  (or  in  the  event  the  target
Federal funds rate is a range of rates, the high of that range) less one
percent, but in no event less than one-half of one percent.
(4)  A  fiduciary  shall  distribute  the  net  income remaining after
distributions required by paragraph  (3)  in  the  manner  described  in
11-A-2.2  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 may not  reduce  principal  or  income  receipts  from
property  described  in  paragraph (1) because of a payment described in
11-A-5.1 or 11-A-5.2 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.