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2023 Oklahoma Statutes › Title 60. Property › §60-175.90. Attachment of present or future distributions - Restrictions limiting distribution powers.

A. A trustee may only make distributions for the purposes designated by the settlor. A creditor, including an exception creditor, has no greater rights than a beneficiary. In this respect, a creditor, including an exception creditor, cannot attach present or future distributions if the claim of the creditor does not come within the distribution standard.
B. A restriction limiting the distribution powers of a trustee as to a trustee, which distribution might result in the loss of a beneficiary’s eligibility for participation in a federal or state benefits program, including, but not limited to, Medicaid, Supplemental Security Income, Social Security Disability Income, or other state or federal benefits program is valid, and no creditor, including an exception creditor, may attach present or future distributions from such a trust. All other restrictions curtailing the distribution power of a trustee are void as to exception creditors, if any exception creditors are provided by the Oklahoma Discretionary and Special Needs Trust Act.
Added by Laws 2010, c. 280, § 10, eff. Nov. 1, 2010.
2023 Oklahoma Statutes › Title 60. Property › §60-175.91. Validity of trust provisions.

A. A provision which provides that a current distribution interest shall either become a discretionary interest or shall terminate upon the attachment by a creditor, including an exception creditor, is valid.
B. A provision that provides a remainder interest shall terminate or change into a dynasty interest upon attachment by a creditor, including an exception creditor, is valid.
Added by Laws 2010, c. 280, § 11, eff. Nov. 1, 2010.
2023 Oklahoma Statutes › Title 60. Property › §60-175.92. Existence of a spendthrift provision - Amount the creditor or assignee may reach.

Subject to the provisions of the Family Wealth Preservation Trust Act:
1. Whether or not the terms of a trust contain a spendthrift provision, the following rules apply:
a.
during the lifetime of the settlor, the property of a revocable trust is subject to the claims of the creditors of the settlor, and
b.
a spendthrift provision is ineffective with respect to the settlor of a revocable trust while the trust is revocable; and
2. A creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the benefit of the settlor. If a trust has more than one settlor, the amount the creditor or assignee of a particular settlor may reach may not exceed the interest of the settlor in the portion of the trust attributable to the contribution of that settlor.
Added by Laws 2010, c. 280, § 12, eff. Nov. 1, 2010.
2023 Oklahoma Statutes › Title 60. Property › §60-175.102. Definitions.

DEFINITIONS
As used in this act:
1. "Accounting period" means a calendar year unless another twelve-month period is selected by a fiduciary. The term includes a portion of a calendar year or other twelve-month period that begins when an income interest begins or ends when an income interest ends;
2. "Beneficiary" includes, in the case of a decedent's estate, an heir, legatee, and devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary;
3. "Fiduciary" means a personal representative or a trustee. The term includes an executor, administrator, successor personal representative, special administrator, and a person performing substantially the same function;
4. "Income" means money or property that a fiduciary receives as current return from a principal asset. The term includes a portion of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 of this act;
5. "Income beneficiary" means a person to whom net income of a trust is or may be payable;
6. "Income interest" means the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee's discretion;
7. "Mandatory income interest" means the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute;
8. "Net income" means the total receipts allocated to income during an accounting period minus the disbursements made from income during the period, plus or minus transfers under this act to or from income during the period;
9. "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;
10. "Principal" means property held in trust for distribution to a remainder beneficiary when the trust terminates;
11. "Remainder beneficiary" means a person entitled to receive principal when an income interest ends;
12. "Terms of a trust" means the manifestation of the intent of a settlor or decedent with respect to the trust, expressed in a manner that admits of its proof in a judicial proceeding, whether by written or spoken words or by conduct; and
13. "Trustee" includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.
Added by Laws 1998, c. 115, § 2, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.103. Fiduciary duties - General principles.

FIDUCIARY DUTIES; GENERAL PRINCIPLES
A. In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of Articles 2 and 3 of this act, a fiduciary:
1. Shall administer a trust or estate in accordance with the terms of the trust or the will, even if there is a different provision in this act;
2. May administer a trust or estate by the exercise of a discretionary power of administration given to the fiduciary by the terms of the trust or the will, even if the exercise of the power produces a result different from a result required or permitted by this act;
3. Shall administer a trust or estate in accordance with this act if the terms of the trust or the will do not contain a different provision or do not give the fiduciary a discretionary power of administration; and
4. Shall add a receipt or charge a disbursement to principal to the extent that the terms of the trust and this act do not provide a rule for allocating the receipt or disbursement to or between principal and income.
B. In exercising the power to adjust under subsection A of Section 4 of this act or a discretionary power of administration regarding a matter within the scope of this act, whether granted by the terms of a trust, a will, or this act, a fiduciary shall administer a trust or estate impartially, based on what is fair and reasonable to all of the beneficiaries, except to the extent that the terms of the trust or the will clearly manifest an intention that the fiduciary shall or may favor one or more of the beneficiaries. A determination in accordance with this act is presumed to be fair and reasonable to all of the beneficiaries.
Added by Laws 1998, c. 115, § 3, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.202. Distribution to residuary and remainder beneficiaries.

DISTRIBUTION TO RESIDUARY AND REMAINDER BENEFICIARIES
A. Each beneficiary described in paragraph 4 of Section 175.201 of Title 60 of the Oklahoma Statutes is entitled to receive a portion of the net income equal to the beneficiary's fractional interest in undistributed principal assets, using values as of the distribution date. If a fiduciary makes more than one distribution of assets to beneficiaries to whom this section applies, each beneficiary, including one who does not receive part of the distribution, is entitled, as of each distribution date, to the net income the fiduciary has received after the date of death or terminating event or earlier distribution date but has not distributed as of the current distribution date.
B. In determining a beneficiary's share of net income, the following rules apply:
1. The beneficiary is entitled to receive a portion of the net income equal to the beneficiary's fractional interest in the undistributed principal assets immediately before the distribution date, including assets that later may be sold to meet principal obligations;
2. The beneficiary's fractional interest in the undistributed principal assets must be calculated without regard to property specifically given to a beneficiary and property required to pay pecuniary amounts not in trust;
3. The beneficiary's fractional interest in the undistributed principal assets must be calculated on the basis of the aggregate value of those assets as of the distribution date without reducing the value by any unpaid principal obligation; and
4. The distribution date for purposes of this section may be the date as of which the fiduciary calculates the value of the assets if that date is reasonably near the date on which assets are actually distributed.
C. If a fiduciary does not distribute all of the collected but undistributed net income to each person as of a distribution date, the fiduciary shall maintain appropriate records showing the interest of each beneficiary in that net income.
D. A fiduciary may apply the rules in this section, to the extent that the fiduciary considers it appropriate, to net gain or loss realized after the date of death or terminating event or earlier distribution date from the disposition of a principal asset if this section applies to the income from the asset.
Added by Laws 1998, c. 115, § 6, eff. Nov. 1, 1998. Amended by Laws 1998, c. 422, § 37, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.301. When right to income begins and ends.

WHEN RIGHT TO INCOME BEGINS AND ENDS
A. An income beneficiary is entitled to net income from the date on which the income interest begins. An income interest begins on the date specified in the terms of the trust or, if no date is specified, on the date an asset becomes subject to a trust or successive income interest.
B. An asset becomes subject to a trust:
1. On the date it is transferred to the trust in the case of an asset that is transferred to a trust during the transferor's life;
2. On the date of a testator's death in the case of an asset that becomes subject to a trust by reason of a will, even if there is an intervening period of administration of the testator's estate; or
3. On the date of an individual's death in the case of an asset that is transferred to a fiduciary by a third party because of the individual's death.
C. An asset becomes subject to a successive income interest on the day after the preceding income interest ends, as determined under subsection D of this section, even if there is an intervening period of administration to wind up the preceding income interest.
D. An income interest ends on the day before an income beneficiary dies or another terminating event occurs, or on the last day of a period during which there is no beneficiary to whom a trustee may distribute income.
Added by Laws 1998, c. 115, § 7, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.302. Apportionment of receipts and disbursements when decedent dies or income interest begins.

APPORTIONMENT OF RECEIPTS AND DISBURSEMENTS
WHEN DECEDENT DIES OR INCOME INTEREST BEGINS
A. A trustee shall allocate an income receipt or disbursement other than one to which paragraph 1 of Section 5 of this act applies to principal if its due date occurs before a decedent dies in the case of an estate or before an income interest begins in the case of a trust or successive income interest.
B. A trustee shall allocate an income receipt or disbursement to income if its due date occurs on or after the date on which a decedent dies or an income interest begins and it is a periodic due date. An income receipt or disbursement must be treated as accruing from day to day if its due date is not periodic or it has no due date. The portion of the receipt or disbursement accruing before the date on which a decedent dies or an income interest begins must be allocated to principal and the balance must be allocated to income.
C. An item of income or an obligation is due on the date the payer is required to make a payment. If a payment date is not stated, there is no due date for the purposes of this act. Distributions to shareholders or other owners from an entity to which Section 10 of this act applies are deemed to be due on the date fixed by the entity for determining who is entitled to receive the distribution or, if no date is fixed, on the declaration date for the distribution. A due date is periodic for receipts or disbursements that must be paid at regular intervals under a lease or an obligation to pay interest or if an entity customarily makes distributions at regular intervals.
Added by Laws 1998, c. 115, § 8, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.303. Apportionment when income interest ends.

APPORTIONMENT WHEN INCOME INTEREST ENDS
A. In this section, "undistributed income" means net income received before the date on which an income interest ends. The term 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.
B. When a mandatory income interest ends, the trustee shall pay to a mandatory income beneficiary who survives that date, or the estate of a deceased mandatory income beneficiary whose death causes the interest to end, the beneficiary's share of the undistributed income that is not disposed of under the terms of the trust unless the beneficiary has an unqualified power to revoke more than five percent (5%) of the trust immediately before the income interest ends. In the latter case, the undistributed income from the portion of the trust that may be revoked must be added to principal.
C. When a trustee's obligation to pay a fixed annuity or a fixed fraction of the value of the trust's assets ends, the trustee shall prorate the final payment if and to the extent required by applicable law to accomplish a purpose of the trust or its settlor relating to income, gift, estate, or other tax requirements.
Added by Laws 1998, c. 115, § 9, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.401. Character of receipts.

CHARACTER OF RECEIPTS
A. In this section, "entity" means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund, or any other organization in which a trustee has an interest other than a trust or estate to which Section 11 of this act applies, a business or activity to which Section 12 of this act applies, or an asset-backed security to which Section 24 of this act applies.
B. Except as otherwise provided in this section, a trustee shall allocate to income money received from an entity.
C. A trustee shall allocate the following receipts from an entity to principal:
1. Property other than money;
2. Money received in one distribution or a series of related distributions in exchange for part or all of a trust's interest in the entity;
3. Money received in total or partial liquidation of the entity; and
4. Money received from an entity that is a regulated investment company or a real estate investment trust if the money distributed is a capital gain dividend for federal income tax purposes.
D. Money is received in partial liquidation:
1. To the extent that the entity, at or near the time of a distribution, indicates that it is a distribution in partial liquidation; or
2. If the total amount of money and property received in a distribution or series of related distributions is greater than twenty percent (20%) of the entity's gross assets, as shown by the entity's year-end financial statements immediately preceding the initial receipt.
E. Money is not received in partial liquidation, nor may it be taken into account under paragraph 2 of subsection D of this section, to the extent that it does not exceed the amount of income tax that a trustee or beneficiary must pay on taxable income of the entity that distributes the money.
F. A trustee may rely upon a statement made by an entity about the source or character of a distribution if the statement is made at or near the time of distribution by the entity's board of directors or other person or group of persons authorized to exercise powers to pay money or transfer property comparable to those of a corporation's board of directors.
Added by Laws 1998, c. 115, § 10, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.402. Distribution from trust or estate.

DISTRIBUTION FROM TRUST OR ESTATE
A trustee shall allocate to income an amount received as a distribution of income from a trust or an estate in which the trust has an interest other than a purchased interest, and shall allocate to principal an amount received as a distribution of principal from such a trust or estate. If a trustee purchases an interest in a trust that is an investment entity, or a decedent or donor transfers an interest in such a trust to a trustee, Section 10 or 24 of this act applies to a receipt from the trust.
Added by Laws 1998, c. 115, § 11, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.403. Business and other activities conducted by trustee.

BUSINESS AND OTHER ACTIVITIES CONDUCTED BY TRUSTEE
A. If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account separately for the business or activity instead of accounting for it as part of the trust's general accounting records, the trustee may maintain separate accounting records for its transactions, whether or not its assets are segregated from other trust assets.
B. A trustee who accounts separately for a business or other activity may determine the extent to which its net cash receipts must be retained for working capital, the acquisition or replacement of fixed assets, and other reasonably foreseeable needs of the business or activity, and the extent to which the remaining net cash receipts are accounted for as principal or income in the trust's general accounting records. If a trustee sells assets of the business or other activity, other than in the ordinary course of the business or activity, the trustee shall account for the net amount received as principal in the trust's general accounting records to the extent the trustee determines that the amount received is no longer required in the conduct of the business.
C. Activities for which a trustee may maintain separate accounting records include:
1. Retail, manufacturing, service, and other traditional business activities;
2. Farming;
3. Raising and selling livestock and other animals;
4. Management of rental properties;
5. Extraction of minerals and other natural resources;
6. Timber operations; and
7. Activities to which Section 23 of this act applies.
Added by Laws 1998, c. 115, § 12, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.404. Principal receipts.

PRINCIPAL RECEIPTS
A trustee shall allocate to principal:
1. To the extent not allocated to income under this act, assets received from a transferor during the transferor's lifetime, a decedent's estate, a trust with a terminating income interest, or a payer under a contract naming the trust or its trustee as beneficiary;
2. Money or other property received from the sale, exchange, liquidation, or change in form of a principal asset, including realized profit, subject to this article;
3. Amounts recovered from third parties to reimburse the trust because of disbursements described in paragraph 7 of subsection A of Section 26 of this act or for other reasons to the extent not based on the loss of income;
4. Proceeds of property taken by eminent domain, but a separate award made for the loss of income with respect to an accounting period during which a current income beneficiary had a mandatory income interest is income;
5. Net income received in an accounting period during which there is no beneficiary to whom a trustee may or must distribute income; and
6. Other receipts as provided in Part 3 of this article.
Added by Laws 1998, c. 115, § 13, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.405. Rental property.

RENTAL PROPERTY
To the extent that a trustee accounts for receipts from rental property pursuant to this section, the trustee shall allocate to income an amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease. An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for future periods, must be added to principal and held subject to the terms of the lease and is not available for distribution to a beneficiary until the trustee's contractual obligations have been satisfied with respect to that amount.
Added by Laws 1998, c. 115, § 14, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.406. Obligation to pay money.

OBLIGATION TO PAY MONEY
A. An amount received as interest, whether determined at a fixed, variable, or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, must be allocated to income without any provision for amortization of premium.
B. A trustee shall allocate to principal an amount received from the sale, redemption, or other disposition of an obligation to pay money to the trustee more than one year after it is purchased or acquired by the trustee, including an obligation the purchase price or value of which when it is acquired is less than its value at maturity. If the obligation matures within one (1) year after it is purchased or acquired by the trustee, an amount received in excess of its purchase price or its value when acquired by the trust must be allocated to income.
C. This section does not apply to obligations to which Section 18, 19, 20, 21, 23, or 24 of this act applies.
Added by Laws 1998, c. 115, § 15, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.407. Insurance policies and similar contracts.

INSURANCE POLICIES AND SIMILAR CONTRACTS
A. Except as otherwise provided in subsection B of this section, a trustee shall allocate to principal the proceeds of a life insurance policy or other contract in which the trust or its trustee is named as beneficiary, including a contract that insures the trust or its trustee against loss for damage to, destruction of, or loss of title to a trust asset. The trustee shall allocate dividends on an insurance policy to income if the premiums on the policy are paid from income, and to principal if the premiums are paid from principal.
B. A trustee shall allocate to income proceeds of a contract that insures the trustee against loss of occupancy or other use by an income beneficiary, loss of income, or, subject to Section 12 of this act, loss of profits from a business.
C. This section does not apply to a contract to which Section 18 of this act applies.
Added by Laws 1998, c. 115, § 16, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.408. Insubstantial allocations not required.

INSUBSTANTIAL ALLOCATIONS NOT REQUIRED
If a trustee determines that an allocation between principal and income required by Section 18, 19, 20, 21, or 24 of this act is insubstantial, the trustee may allocate the entire amount to principal unless one of the circumstances described in subsection C of Section 4 of this act applies to the allocation. This power may be exercised by a cotrustee in the circumstances described in subsection D of Section 4 of this act and may be released for the reasons and in the manner described in subsection E of Section 4 of this act. An allocation is presumed to be insubstantial if:
1. The amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than ten percent (10%); or
2. The value of the asset producing the receipt for which the allocation would be made is less than ten percent (10%) of the total value of the trust's assets at the beginning of the accounting period.
Added by Laws 1998, c. 115, § 17, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.410. Liquidating asset.

LIQUIDATING ASSET
A. In this section, "liquidating asset" means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a period of limited duration. The term includes a leasehold, patent, copyright, royalty right, and right to receive payments during a period of more than one (1) year under an arrangement that does not provide for the payment of interest on the unpaid balance. The term does not include a payment subject to Section 18 of this act, resources subject to Section 20 of this act, timber subject to Section 21 of this act, an activity subject to Section 23 of this act, an asset subject to Section 24 of this act, or any asset for which the trustee establishes a reserve for depreciation under Section 27 of this act.
B. A trustee shall allocate to income ten percent (10%) of the receipts from a liquidating asset and the balance to principal.
Added by Laws 1998, c. 115, § 19, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.411. Minerals, water, and other natural resources.

MINERALS, WATER, AND OTHER NATURAL RESOURCES
A. To the extent that a trustee accounts for receipts from an interest in minerals or other natural resources pursuant to this section, the trustee shall allocate them as follows:
1. If received as a bonus, delay rental or annual rent on a lease, a receipt of less than One Thousand Dollars ($1,000.00) must be allocated to income and a receipt of One Thousand Dollars ($1,000.00) or more must be allocated fifteen percent (15%) to principal and eighty-five percent (85%) to income;
2. If received from a production payment, a receipt must be allocated to income if and to the extent that the agreement creating the production payment provides a factor for interest or its equivalent. The balance must be allocated to principal;
3. If received as a royalty, shut-in-well payment, or take-or-pay payment, a receipt must be allocated fifteen percent (15%) to principal and eighty-five percent (85%) to income;
4. If an amount is received from a working interest or any other interest not provided for in paragraph 1, 2, or 3 of this subsection, a receipt must be allocated fifteen percent (15%) to principal and eighty-five percent (85%) to income.
B. An amount received on account of an interest in water that is renewable must be allocated to income. If the water is not renewable, ninety percent (90%) of the amount must be allocated to principal and the balance to income.
C. This act applies whether or not a decedent or donor was extracting minerals, water, or other natural resources before the interest became subject to the trust.
D. If a trust exists on the effective date of this act, the trustee may allocate receipts from an interest in minerals, water, or other natural resources as provided in this act or in the manner used by the trustee before the effective date of this act. For every trust created after the effective date of this act, the trustee shall allocate receipts from an interest in minerals, water, or other natural resources as provided in this act. If and to the extent that the terms of a trust expressly provide for a different allocation of receipts or grants the trustee discretionary authority to determine the amount of the allocation, this act shall not apply to those receipts.
Added by Laws 1998, c. 115, § 20, eff. Nov. 1, 1998. Amended by Laws 1999, c. 419, § 2, emerg. eff. June 10, 1999.
2023 Oklahoma Statutes › Title 60. Property › §60-175.412. Timber.

TIMBER
A. To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee shall allocate the net receipts:
1. To income to the extent that the amount of timber removed from the land does not exceed the estimated rate of growth of the timber during the accounting periods in which a beneficiary has a mandatory income interest;
2. To principal to the extent that the amount of timber removed from the land exceeds the estimated rate of growth of the timber or the net receipts are from the sale of standing timber;
3. To or between income and principal if the net receipts are from the lease of timberland or from a contract to cut timber from land owned by a trust, by determining the amount of timber removed from the land under the lease or contract and applying the rules in paragraphs 1 and 2 of this subsection; or
4. To principal to the extent that advance payments, bonuses, and other payments are not allocated pursuant to paragraph 1, 2, or 3 of this subsection.
B. In determining net receipts to be allocated pursuant to subsection A of this section, a trustee may deduct and transfer to principal a reasonable amount for depletion.
C. This act applies whether or not a decedent or transferor was harvesting timber from the property before it became subject to the trust.
D. If a trust exists on the effective date of this act, the trustee may allocate receipts from an interest in timber as provided in this act or in the manner used by the trustee before the effective date of this act. For every trust created after the effective date of this act, the trustee shall allocate receipts from an interest in timber as provided in this act. If and to the extent that the terms of a trust expressly provide for a different allocation of receipts or grants the trustee discretionary authority to determine the amount of the allocation, this act shall not apply to those receipts.
Added by Laws 1998, c. 115, § 21, eff. Nov. 1, 1998. Amended by Laws 1999, c. 419, § 3, emerg. eff. June 10, 1999.
2023 Oklahoma Statutes › Title 60. Property › §60-175.413. Property not productive of income.

PROPERTY NOT PRODUCTIVE OF INCOME
A. If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the spouse with sufficient income from or use of the trust assets, and if the amounts that the trustee transfers from principal to income under Section 175.104 of Title 60 of the Oklahoma Statutes and distributes to the spouse from principal pursuant to the terms of the trust are insufficient to provide the spouse with the beneficial enjoyment required to obtain the marital deduction, the spouse may require the trustee to make property productive of income, convert property within a reasonable time, or exercise the power conferred by subsection A of Section 175.104 of Title 60 of the Oklahoma Statutes. The trustee may decide which action or combination of actions to take.
B. In cases not governed by subsection A of this section, proceeds from the sale or other disposition of an asset are principal without regard to the amount of income the asset produces during any accounting period.
Added by Laws 1998, c. 115, § 22, eff. Nov. 1, 1998. Amended by Laws 1998, c. 422, § 38, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.414. Derivatives and options.

DERIVATIVES AND OPTIONS
A. In this section, "derivative" means a contract or financial instrument or a combination of contracts and financial instruments which gives a trust the right or obligation to participate in some or all changes in the price of a tangible or intangible asset or group of assets, or 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 accounts for transactions in derivatives pursuant to this section, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions.
C. If a trustee grants an option to buy property from the trust, whether or not the trust owns the property when the option is granted, grants an option that permits another person to sell property to the trust, or 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.
Added by Laws 1998, c. 115, § 23, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.415. Asset-backed securities.

ASSET-BACKED SECURITIES
A. 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. The term 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. The term does not include an asset to which Section 10 or 18 of this act applies.
B. If a trust receives a payment from interest or other current return and from other proceeds of the collateral financial assets, the trustee shall allocate to income the portion of the payment which the payer identifies as being from interest or other current return and shall allocate the balance of the payment to principal.
C. If a trust receives one or more payments in exchange for the trust's entire interest in an asset-backed security in one accounting period, the trustee shall allocate the payments to principal. If a payment is one of a series of payments that will result in the liquidation of the trust's interest in the security over more than one accounting period, the trustee shall allocate ten percent (10%) of the payment to income and the balance to principal.
Added by Laws 1998, c. 115, § 24, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.501. Disbursements from income.

DISBURSEMENTS FROM INCOME
A trustee shall make the following disbursements from income to the extent that they are not disbursements to which subparagraph b or c of paragraph 2 of Section 5 of this act applies:
1. One-half of the regular compensation of the trustee and of any person providing investment advisory or custodial services to the trustee;
2. One-half of all expenses for accountings, judicial proceedings, or other matters that involve both the income and remainder interests;
3. All of the other ordinary expenses incurred in connection with the administration, management, or preservation of trust property and the distribution of income, including interest, ordinary repairs, regularly recurring taxes assessed against principal, and expenses of a proceeding or other matter that concerns primarily the income interest; and
4. Recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset.
Added by Laws 1998, c. 115, § 25, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.502. Disbursements from principal.

DISBURSEMENTS FROM PRINCIPAL
A. A trustee shall make the following disbursements from principal:
1. The remaining one-half of the disbursements described in paragraph 1 and 2 of Section 25 of this act;
2. All of the trustee's compensation calculated on principal as a fee for acceptance, distribution, or termination, and disbursements made to prepare property for sale;
3. Payments on the principal of a trust debt;
4. Expenses of a proceeding that concerns primarily principal, including a proceeding to construe the trust or to protect the trust or its property;
5. Premiums paid on a policy of insurance not described in paragraph 4 of Section 25 of this act of which the trust is the owner and beneficiary;
6. Estate, inheritance, and other transfer taxes, including penalties, apportioned to the trust; and
7. Disbursements related to environmental matters, including reclamation, assessing environmental conditions, remedying and removing environmental contamination, monitoring remedial activities and the release of substances, preventing future releases of substances, collecting amounts from persons liable or potentially liable for the costs of those activities, penalties imposed under environmental laws or regulations and other payments made to comply with those laws or regulations, statutory or common law claims by third parties, and defending claims based on environmental matters.
B. If a principal asset is encumbered with an obligation that requires income from that asset to be paid directly to the creditor, the trustee shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.
Added by Laws 1998, c. 115, § 26, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.503. Transfers from income to principal for depreciation.

TRANSFERS FROM INCOME TO PRINCIPAL FOR DEPRECIATION
A. In this section, "depreciation" means a reduction in value due to wear, tear, decay, corrosion, or gradual obsolescence of a fixed asset having a useful life of more than one (1) year.
B. A trustee may transfer to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, but may not transfer any amount for depreciation:
1. Of that portion of real property used or available for use by a beneficiary as a residence or of tangible personal property held or made available for the personal use or enjoyment of a beneficiary;
2. During the administration of a decedent's estate; or
3. Under this section if the trustee is accounting under Section 12 of this act for the business or activity in which the asset is used.
C. An amount transferred to principal need not be held as a separate fund.
Added by Laws 1998, c. 115, § 27, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.504. Transfers from income to reimburse principal.

TRANSFERS FROM INCOME TO REIMBURSE PRINCIPAL
A. If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.
B. Principal disbursements to which subsection A of this section applies include the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a third party:
1. An amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs;
2. A capital improvement to a principal asset, whether in the form of changes to an existing asset or the construction of a new asset, including special assessments;
3. Disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and broker's commissions;
4. Periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments; and
5. Disbursements described in paragraph 7 of subsection A of Section 26 of this act.
C. If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in subsection A of this section.
Added by Laws 1998, c. 115, § 28, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.505. Income taxes.

INCOME TAXES
A. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.
B. A tax required to be paid by a trustee based on receipts allocated to principal must be paid from principal, even if the tax is called an income tax by the taxing authority.
C. A tax required to be paid by a trustee on the trust's share of an entity's taxable income must be paid:
1. From income to the extent that receipts from the entity are allocated only to income;
2. From principal to the extent that receipts from the entity are allocated only to principal;
3. Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; and
4. From principal to the extent that the tax exceeds the total receipts from the entity.
D. After applying subsections A through C of this section, the trustee shall adjust income or principal receipts to the extent that the trust’s taxes are reduced because the trust receives a deduction for payments made to a beneficiary.
Added by Laws 1998, c. 115, § 29, eff. Nov. 1, 1998. Amended by Laws 2009, c. 90, § 2, eff. Nov. 1, 2009.
2023 Oklahoma Statutes › Title 60. Property › §60-175.506. Adjustments between principal and income because of taxes.

ADJUSTMENTS BETWEEN PRINCIPAL AND INCOME BECAUSE OF TAXES
A. A fiduciary may make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries which arise from:
1. Elections and decisions, other than those described in subsection B of this section, that the fiduciary makes from time to time regarding tax matters;
2. An income tax or any other tax that is imposed upon the fiduciary or a beneficiary as a result of a transaction involving or a distribution from the estate or trust; or
3. The ownership by an estate or trust of an interest in an entity whose taxable income, whether or not distributed, is includable in the taxable income of the estate, trust, or a beneficiary.
B. If the amount of an estate tax marital deduction or charitable contribution deduction is reduced because a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting it for estate tax purposes, and as a result estate taxes paid from principal are increased and income taxes paid by an estate, trust, or beneficiary are decreased, each estate, trust, or beneficiary that benefits from the decrease in income tax shall reimburse the principal from which the increase in estate tax is paid. The total reimbursement must equal the increase in the estate tax to the extent that the principal used to pay the increase would have qualified for a marital deduction or charitable contribution deduction but for the payment. The proportionate share of the reimbursement for each estate, trust, or beneficiary whose income taxes are reduced must be the same as its proportionate share of the total decrease in income tax. An estate or trust shall reimburse principal from income.
Added by Laws 1998, c. 115, § 30, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.601. Uniformity of application and construction.

UNIFORMITY OF APPLICATION AND CONSTRUCTION
In applying and construing this Uniform Act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.
Added by Laws 1998, c. 115, § 31, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.602. Application of act to existing trusts and estates.

APPLICATION OF ACT TO EXISTING TRUSTS AND ESTATES
This act applies to every trust or decedent's estate existing on the effective date of this act except as otherwise expressly provided in the will or terms of the trust or in this act.
Added by Laws 1998, c. 115, § 32, eff. Nov. 1, 1998.
2023 Oklahoma Statutes › Title 60. Property › §60-175.603. Application of Section 175.409 of Title 60 to trusts - Particular dates.

TRANSITIONAL MATTERS
Section 175.409 of Title 60 of the Oklahoma Statutes applies to a trust described in subsection D of Section 175.409 of Title 60 of the Oklahoma Statutes on and after the following dates:
1. If the trust is not funded as of November 1, 2009, the date of the decedent’s death;
2. If the trust is initially funded in the calendar year beginning January 1, 2009, the date of the decedent’s death; or
3. If the trust is not described in paragraph 1 or 2 of this section, January 1, 2009.
Added by Laws 2009, c. 90, § 3, eff. Nov. 1, 2009.
2023 Oklahoma Statutes › Title 60. Property › §60-175.701. Short title - Oklahoma Decanting Act.

SHORT TITLE
This act shall be known and may be cited as the "Oklahoma Decanting Act" and shall apply to any trust administered under the laws of this state including a trust whose governing jurisdiction is transferred to this state.
Added by Laws 2021, c. 268, § 1, eff. Nov. 1, 2021.
2023 Oklahoma Statutes › Title 60. Property › §60-175.702. Definitions.

DEFINITIONS
As used in this act, unless the context or subject matter otherwise requires:
1. "Authorized trustee" means a person, other than the settlor, who has authority under the terms of a first trust to distribute the principal or income of the trust to or for the benefit of one or more current beneficiaries or a special needs fiduciary under Section 5 of this act;
2. "Charity" means a charitable organization or a charitable trust, as those terms are defined by Section 301.3 of Title 60 of the Oklahoma Statutes or Section 552.2 of Title 18 of the Oklahoma Statutes;
3. "Current beneficiary" with respect to a particular date, means a person who is receiving or is eligible to receive a distribution of income or principal from a trust on that date;
4. "First trust" means an existing irrevocable inter vivos or testamentary trust all or part of the principal of which is distributed in further trust under Section 3 or 4 of this act;
5. "Full discretion" means a power to distribute principal or income to or for the benefit of one or more of the beneficiaries of a trust that is not a trust with limited discretion;
6. "Limited discretion" means:
a.
a power to distribute principal or income according to mandatory distribution provisions under which the trustee has no discretion, or
b.
a power to distribute principal or income to or for the benefit of one or more beneficiaries of a trust that is limited by an ascertainable standard, including the health, education, support or maintenance of the beneficiary;
7. "Presumptive remainder beneficiary", with respect to a particular date, means a beneficiary of a trust on that date who, in the absence of notice to the trustee of the exercise of the power of appointment and assuming that any other powers of appointment under the trust are not exercised, would be eligible to receive a distribution from the trust if:
a.
the trust terminated on that date, or
b.
the interests of all current beneficiaries ended on that date without causing the trust to terminate;
8. "Principal" means property held in trust for distribution including accumulated income, that, at the time of the exercise of a power of distribution under Section 3 or 4 of this act, is not currently required to be distributed;
9. "Second trust" means any irrevocable trust to which principal is distributed under Section 3 or 4 of this act; and
10. "Successor beneficiary" means a beneficiary other than a current or presumptive remainder beneficiary. The term does not include a potential appointee under a power of appointment held by a beneficiary.
Added by Laws 2021, c. 268, § 2, eff. Nov. 1, 2021.