reglab/statecodes huggingface dataset:
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS FROM ENTITIES (§§ 35-6-401 — 35-6-403) › Section 35-6-403 - 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 §
35-6-414
applies.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NOT NORMALLY APPORTIONED (§§ 35-6-404 — 35-6-407) › Section 35-6-404 - Principal receipts

A trustee shall allocate to principal:
(1)
To the extent not allocated to income under this chapter, 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 chapter;
(3)
Amounts recovered from third parties to reimburse the trust because of disbursements described in §
35-6-502(a)(7)
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 4C, §§
35-6-408
- 35-6-415.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NOT NORMALLY APPORTIONED (§§ 35-6-404 — 35-6-407) › Section 35-6-405 - 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.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NOT NORMALLY APPORTIONED (§§ 35-6-404 — 35-6-407) › Section 35-6-406 - 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 (1) year after it is purchased or acquired by the trustee, including an obligation whose purchase price or value 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 an obligation to which §
35-6-409
, §
35-6-410
, §
35-6-411
, §
35-6-412
, §
35-6-414
, or §
35-6-415
applies.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NOT NORMALLY APPORTIONED (§§ 35-6-404 — 35-6-407) › Section 35-6-407 - Insurance policies and similar contracts

(a)
Except as otherwise provided in subsection (b), 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 §
35-6-403
, loss of profits from a business.
(c)
This section does not apply to a contract to which §
35-6-409
applies.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NORMALLY APPORTIONED (§§ 35-6-408 — 35-6-415) › Section 35-6-408 - Insubstantial allocations not required

If a trustee determines that an allocation between principal and income required by §
35-6-409
, §
35-6-410
, §
35-6-411
, §
35-6-412
, or §
35-6-415
is insubstantial, the trustee may allocate the entire amount to principal unless one (1) of the circumstances described in §
35-6-104(c)
applies to the allocation. This power may be exercised by a cotrustee in the circumstances described in §
35-6-104(d)
and may be released for the reasons and in the manner described in §
35-6-104(e)
. 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.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NORMALLY APPORTIONED (§§ 35-6-408 — 35-6-415) › Section 35-6-410 - 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. Liquidating asset 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. Liquidating asset does not include a payment subject to §
35-6-409
, resources subject to §
35-6-411
, timber subject to §
35-6-412
, an activity subject to §
35-6-414
, an asset subject to §
35-6-415
, or any asset for which the trustee establishes a reserve for depreciation under §
35-6-503
.
(b)
A trustee shall allocate to income ten percent (10%) of the receipts from a liquidating asset and the balance to principal.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NORMALLY APPORTIONED (§§ 35-6-408 — 35-6-415) › Section 35-6-411 - 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 nominal delay rental or nominal annual rent on a lease, a receipt must be allocated 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 an amount received as a royalty, shut-in-well payment, take-or-pay payment, bonus, or delay rental is more than nominal, ninety percent (90%) must be allocated to principal and the balance to income; and
(4)
If an amount is received from a working interest or any other interest not provided for in subdivision (1), (2), or (3), ninety percent (90%) of the net amount received must be allocated to principal and the balance 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 chapter 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 owns an interest in minerals, water, or other natural resources on June 30, 1999, the trustee may allocate receipts from the interest as provided in this chapter or in the manner used by the trustee before July 1, 1999. If the trust acquires an interest in minerals, water, or other natural resources on or after July 1, 1999, the trustee shall allocate receipts from the interest as provided in this chapter.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NORMALLY APPORTIONED (§§ 35-6-408 — 35-6-415) › Section 35-6-412 - 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 to:
(1)
Income to the extent that the amount of timber removed from the land does not exceed the rate of growth of the timber during the accounting periods in which a beneficiary has a mandatory income interest;
(2)
Principal to the extent that the amount of timber removed from the land exceeds the rate of growth of the timber or the net receipts are from the sale of standing timber;
(3)
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 subdivisions (1) and (2); or
(4)
Principal to the extent that advance payments, bonuses, and other payments are not allocated pursuant to subdivision (1), (2), or (3).
(b)
In determining net receipts to be allocated pursuant to subsection (a), a trustee shall deduct and transfer to principal a reasonable amount for depletion.
(c)
This chapter 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 owns an interest in timberland on June 30, 1999, the trustee may allocate net receipts from the sale of timber and related products as provided in this chapter or in the manner used by the trustee before July 1, 1999. If the trust acquires an interest in timberland on or after July 1, 1999, the trustee shall allocate net receipts from the sale of timber and related products as provided in this chapter.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NORMALLY APPORTIONED (§§ 35-6-408 — 35-6-415) › Section 35-6-413 - 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 §
35-6-104
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 §
35-6-104(a)
. The trustee may decide which action or combination of actions to take.
(b)
In cases not governed by subsection (a), 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.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NORMALLY APPORTIONED (§§ 35-6-408 — 35-6-415) › Section 35-6-414 - 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 does not account under §
35-6-403
for transactions in derivatives, 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.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 4 - ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST (§§ 35-6-401 — 35-6-415) › RECEIPTS NORMALLY APPORTIONED (§§ 35-6-408 — 35-6-415) › Section 35-6-415 - 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. Asset-backed securities 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 securities does not include an asset to which §
35-6-401
or §
35-6-409
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 (1) or more payments in exchange for the trust's entire interest in an asset-backed security in one (1) accounting period, the trustee shall allocate the payments to principal. If a payment is one (1) of a series of payments that will result in the liquidation of the trust's interest in the security over more than one (1) accounting period, the trustee shall allocate ten percent (10%) of the payment to income and the balance to principal.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 5 - ALLOCATION OF DISBURSEMENTS DURING ADMINISTRATION OF TRUST (§§ 35-6-501 — 35-6-506) › Section 35-6-501 - Disbursements from income

A trustee shall make the following disbursements from income to the extent that they are not disbursements to which §
35-6-201(2)(B) or (C)
applies:
(1)
One-half (1/2) of the regular compensation of the trustee and of any person providing investment advisory or custodial services to the trustee;
(2)
One-half (1/2) 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.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 5 - ALLOCATION OF DISBURSEMENTS DURING ADMINISTRATION OF TRUST (§§ 35-6-501 — 35-6-506) › Section 35-6-502 - Disbursements from principal

(a)
A trustee shall make the following disbursements from principal:
(1)
The remaining one-half (1/2) of the disbursements described in §
35-6-501(1) and (2)
; however, if in the judgment of the trustee, the charging of a part or all of that portion of the compensation described under §
35-6-501(1)
to principal is impracticable because of the lack of sufficient principal cash and readily marketable intangible personal property, or inadvisable because of the nature of the assets, then that part or all of the compensation must be paid out of income so long as the adjustment does not violate §
35-6-104(c)
. The decision of the trustee to pay a larger portion or all of the compensation out of income is conclusive, and the income of the trust is not entitled to reimbursement from principal at any subsequent time or times;
(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 §
35-6-501(4)
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.
Amended by 2021 Tenn. Acts, ch. 420, s 18, eff. 7/1/2021.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 5 - ALLOCATION OF DISBURSEMENTS DURING ADMINISTRATION OF TRUST (§§ 35-6-501 — 35-6-506) › Section 35-6-503 - 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 §
35-6-403
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.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 5 - ALLOCATION OF DISBURSEMENTS DURING ADMINISTRATION OF TRUST (§§ 35-6-501 — 35-6-506) › Section 35-6-504 - 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 (1) or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.
(b)
Principal disbursements to which subsection (a) 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 §
35-6-502(a)(7)
.
(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).
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 5 - ALLOCATION OF DISBURSEMENTS DURING ADMINISTRATION OF TRUST (§§ 35-6-501 — 35-6-506) › Section 35-6-505 - 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)-(c), 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.
Acts 2000, ch. 829, § 1; 2010, ch. 725, § 2.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 5 - ALLOCATION OF DISBURSEMENTS DURING ADMINISTRATION OF TRUST (§§ 35-6-501 — 35-6-506) › Section 35-6-506 - 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), 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.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 6 - MISCELLANEOUS PROVISIONS (§§ 35-6-601 — 35-6-602) › Section 35-6-601 - Application and construction of chapter 6

Section
35-15-1101
controls all application and construction of chapter 6.
Amended by 2013 Tenn. Acts, ch. 390,s 1, eff. 7/1/2013.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 6 - UNIFORM PRINCIPAL AND INCOME ACT (§§ 35-6-101 — 35-6-602) › Part 6 - MISCELLANEOUS PROVISIONS (§§ 35-6-601 — 35-6-602) › Section 35-6-602 - Application of act to existing trusts and estates

This act applies to every trust or decedent's estate existing on or after July 1, 2000, except as otherwise expressly provided in the will or terms of the trust or in this act.
Acts 2000, ch. 829, § 1.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-101 - Short title

This chapter shall be known and may be cited as the "Tennessee Uniform Transfers to Minors Act."
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-201.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-102 - Chapter definitions

As used in this chapter, unless the context otherwise requires:
(1)
"Adult" means an individual who has attained twenty-one (21) years of age;
(2)
"Benefit plan" means an employer's plan for the benefit of an employee or partner;
(3)
"Broker" means a person lawfully engaged in the business of effecting transactions in securities or commodities for the person's own account or for the account of others;
(4)
"Court" means the chancery, probate and juvenile courts and other courts having probate jurisdiction, which shall have concurrent jurisdiction under this chapter;
(5)
"Custodial property" means:
(A)
Any interest in property transferred to a custodian under this chapter; and
(B)
The income from and proceeds of that interest in property;
(6)
"Custodian" means a person so designated, including a person designated as a joint custodian pursuant to §
35-7-111
, or a successor or substitute custodian designated according to this chapter;
(7)
"Financial institution" means a bank, trust company, savings institution, or credit union, chartered and supervised under state or federal law;
(8)
"Guardian" means a person appointed by or qualified in a court to act as a general, limited, or temporary guardian or conservator of a minor's property or person or a person legally authorized to perform substantially the same functions;
(9)
"Legal representative" means an individual's personal representative, guardian or conservator;
(10)
"Member of the minor's family" means the minor's parent, stepparent, spouse, grandparent, brother, sister, uncle, or aunt, whether of the whole or half blood or by adoption;
(11)
"Minor" means an individual who has not attained twenty-one (21) years of age, although the minor may already be of legal age;
(12)
"Person" means an individual, corporation, organization, or other legal entity;
(13)
"Personal representative" means an executor, administrator, successor personal representative, or special administrator of a decedent's estate or a person legally authorized to perform substantially the same functions;
(14)
"Qualified minor's trust" means any trust, including a trust created by the custodian, that satisfies the requirements of federal Internal Revenue Code § 2503(c) (
26 U.S.C. § 2503(c)
), and the regulations implementing that section;
(15)
"State" includes any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession subject to the legislative authority of the United States;
(16)
"Transfer" means a transaction that creates custodial property under this chapter;
(17)
"Transferor" means a person who makes a transfer under this chapter; and
(18)
"Trust company" means a financial institution, corporation, or other legal entity, authorized to exercise general trust powers.
Acts 1992, ch. 664, § 1; 1996, ch. 593, § 1; T.C.A. §35-7-202; Acts 2007 , ch. 8, § 11.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-103 - Scope and jurisdiction

(a)
This chapter applies to a transfer made on or after October 1, 1992, that refers to this chapter in the designation by which the transfer is made, if at the time of the transfer, the transferor, the minor, or the custodian is a resident of this state or the custodial property is located in this state. The custodianship so created remains subject to this chapter despite a subsequent change in residence of a transferor, the minor, or the custodian, or the removal of custodial property from this state.
(b)
A person designated as custodian under this chapter is subject to personal jurisdiction in this state with respect to any matter relating to the custodianship.
(c)
A transfer that purports to be made and that is valid under the Uniform Transfers to Minors Act, the Uniform Gifts to Minors Act, or substantially similar act, of another state is governed by the law of the designated state and may be executed and is enforceable in this state, if at the time of the transfer, the transferor, the minor, or the custodian is a resident of the designated state or the custodial property is located in the designated state.
(d)
This chapter shall not be construed as an exclusive method for making gifts or other transfers to minors.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-203.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-104 - Nomination of custodian

(a)
A person having the right to designate the recipient of property transferable upon the occurrence of a future event may revocably nominate a custodian to receive the property for a minor beneficiary upon the occurrence of the event by naming the custodian followed in substance by the words "as custodian for ______________ (name of minor) under the Tennessee Uniform Transfers to Minors Act." The nomination may name one (1) or more persons as substitute custodians to whom the property must be transferred, in the order named, if the first nominated custodian dies before the transfer or is unable, declines, or is ineligible to serve. The nomination may be made in a will, a trust, a deed, an instrument exercising a power of appointment, or in a writing designating a beneficiary of contractual rights which is registered with or delivered to the payor, issuer, or other obligor of the contractual rights.
(b)
A custodian nominated under this section must be a person to whom a transfer of property of that kind may be made under §
35-7-110(a)
.
(c)
The nomination of a custodian under this section does not create custodial property until the nominating instrument becomes irrevocable or a transfer to the nominated custodian is completed. Unless the nomination of a custodian has been revoked, upon the occurrence of the future event, the custodianship becomes effective and the custodian shall enforce a transfer of the custodial property pursuant to §
35-7-110
.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-204.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-105 - Transfer by gift or exercise of power of appointment

A person may make a transfer by irrevocable gift to, or the irrevocable exercise of a power of appointment in favor of, a custodian for the benefit of a minor pursuant to §
35-7-110
.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-205.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-106 - Transfer authorized by will or trust

(a)
A personal representative or trustee may make an irrevocable transfer pursuant to §
35-7-110
, to a custodian for the benefit of a minor as authorized in the governing will or trust or by a judicial order.
(b)
If the testator or settlor has nominated a custodian under §
35-7-104
, to receive the custodial property, the transfer must be made to that person.
(c)
If the testator or settlor has not nominated a custodian or all persons so nominated as custodian die before the transfer or are unable, decline, or are ineligible to serve, the personal representative or the trustee, as the case may be, shall designate the custodian from among those eligible to serve as custodian for property of that kind under §
35-7-110(a)
.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-206.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-107 - Other transfer by fiduciary

(a)
Subject to subsection (c), a personal representative or trustee may make an irrevocable transfer to another adult or trust company as custodian for the benefit of a minor pursuant to §
35-7-110
, in the absence of a will or under a will or trust that does not contain an authorization to do so.
(b)
Subject to subsection (c), a guardian may make an irrevocable transfer to another adult or trust company as custodian for the benefit of the minor pursuant to §
35-7-110
.
(c)
A transfer under subsection (a) or (b) may be made only if:
(1)
The personal representative, trustee, or guardian considers the transfer to be in the best interest of the minor;
(2)
The transfer is not prohibited by or inconsistent with provisions of the applicable will, trust agreement, or other governing instrument; and
(3)
The transfer is authorized by the court if it exceeds twenty-five thousand dollars ($25,000) in value.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-207.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-108 - Transfer by obligor

(a)
Subject to subsections (b) and (c), a person not subject to §
35-7-106
or §
35-7-107
, who holds property of, or owes a liquidated debt or judgment to, a minor not having a guardian may make an irrevocable transfer to a custodian for the benefit of the minor pursuant to §
35-7-110
.
(b)
If a person having the right to do so under §
35-7-104
has nominated a custodian under this chapter to receive the custodial property, the transfer must be made to that person.
(c)
If no custodian has been nominated, or all persons so nominated as custodian die before the transfer or are unable, decline, or are ineligible to serve, a transfer under this section may be made to an adult member of the minor's family or to a trust company unless the property exceeds twenty-five thousand dollars ($25,000) in value. If the transfer exceeds twenty-five thousand dollars ($25,000) in value, it may be made only if it is authorized by the court.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-208.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-109 - Receipt for custodial property

A written acknowledgment of delivery by a custodian constitutes a sufficient receipt and discharge for custodial property transferred to the custodian pursuant to this chapter.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-209.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-111 - Transfers - Single and joint custodians

A transfer may be made only for one (1) minor, and up to two (2) persons may be the custodians. All custodial property held under this chapter by the same custodian or custodians for the benefit of the same minor constitutes a single custodianship. If more than one (1) person is appointed a custodian, such persons shall act as joint custodians under this chapter and, unless specified in any document creating the custodial property, each joint custodian shall have full power and authority to act alone with respect to the custodial property. If either joint custodian resigns, dies, becomes incapacitated or is removed, then the remaining one (1) of them may serve as sole custodian without the necessity of appointing a successor joint custodian.
Acts 1992, ch. 664, § 1; 1996, ch. 593, § 3; T.C.A. § 35-7-211.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-112 - Validity and effect of transfer

(a)
The validity of a transfer made in a manner prescribed in this chapter is not affected by:
(1)
Failure of the transferor to comply with sections hereof concerning possession and control;
(2)
Designation of an ineligible custodian, except designation of the transferor in the case of property for which the transferor is ineligible to serve as custodian under this chapter; or
(3)
Death or incapacity of a person nominated or designated as custodian or the written disclaimer of the office by that person.
(b)
A transfer made pursuant to this chapter is irrevocable, and the custodial property is indefeasibly vested in the minor, but the custodian has all the rights, powers, duties, and authority provided in this chapter, and neither the minor nor the minor's legal representative has any right, power, duty, or authority with respect to the custodial property except as provided in this chapter.
(c)
By making a transfer, the transferor incorporates in the disposition all the provisions of this chapter and grants to the custodian, and to any third person dealing with a person designated as custodian, the respective powers, rights, and immunities provided in this chapter.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-212.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-113 - Care of custodial property

(a)
A custodian shall:
(1)
Take control of custodial property;
(2)
Register or record title to custodial property, except tangible personal property of a type for which registration or recording of title is not required under Tennessee law; and
(3)
Collect, hold, manage, invest, and reinvest custodial property.
(b)
In dealing with custodial property, a custodian shall observe the standard of care that would be observed by a prudent person dealing with property of another and is not limited by any other statute restricting investments by fiduciaries. If a custodian has a special skill or expertise or is named custodian on the basis of representations of a special skill or expertise, the custodian shall use that skill or expertise. However, a custodian, in the custodian's discretion and without liability to the minor or the minor's estate, may retain any custodial property received from a transferor.
(c)
A custodian may invest in or pay premiums on life insurance or endowment policies on:
(1)
The life of the minor only if the minor or the minor's estate is the sole beneficiary; or
(2)
The life of another person in whom the minor has an insurable interest;
only to the extent that the minor, the minor's estate, or the custodian in the capacity of custodian, is the irrevocable beneficiary.
(d)
A custodian at all times shall keep custodial property separate and distinct from all other property in a manner sufficient to identify it clearly as custodial property of the minor. Custodial property consisting of an undivided interest is so identified if the minor's interest is held as a tenant in common and is fixed. Custodial property subject to recordation is so identified if it is recorded, and custodial property subject to registration is so identified if it is either registered or held in an account designated in the name of the custodian, followed in substance by the words "as a custodian for (name of minor) under the Tennessee Uniform Transfers to Minors Act."
(e)
A custodian shall keep records of all transactions with respect to custodial property, including information necessary for the preparation of the minor's tax returns, and shall make them available for inspection at reasonable intervals by a parent or legal representative of the minor or by the minor if the minor has attained fourteen (14) years of age.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-213.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-114 - Powers of custodian

(a)
A custodian, acting in a custodial capacity, has all the rights, powers, and authority over custodial property that unmarried adult owners have over their own property, but a custodian may exercise those rights, powers, and authority in that capacity only.
(b)
This section does not relieve a custodian from liability for breach of duties of care under §
35-7-113
.
(c)
The custodian is authorized to invest some or all of the custodial property in the Internal Revenue Code Section 529 plan, if the custodian determines the investment to be in the best interest of the minor.
Acts 1992, ch. 664, § 1; 2005, ch. 99, § 7; T.C.A. § 35-7-214.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-115 - Use of custodial property

(a)
A custodian may deliver or pay to the minor or expend for the minor's benefit so much of the custodial property as the custodian considers advisable for the use and benefit of the minor, without court order and without regard to:
(1)
The duty or ability of the custodian personally or of any other person to support the minor; or
(2)
Any other income or property of the minor which may be applicable or available for that purpose.
(b)
On petition of an interested person or the minor, if the minor has attained fourteen (14) years of age, the court may order the custodian to deliver or pay to the minor or expend for the minor's benefit so much of the custodial property as the court considers advisable for the use and benefit of the minor.
(c)
A delivery, payment, or expenditure under this section is in addition to, not in substitution for, and does not affect any obligation of a person to support the minor.
Acts 1992, ch. 664, § 1;; T.C.A. § 35-7-215.
2023 Tennessee Code › Title 35 - FIDUCIARIES AND TRUST ESTATES (§§ 35-1-101 — 35-50-125) › Chapter 7 - TENNESSEE UNIFORM TRANSFERS TO MINORS ACT (§§ 35-7-101 — 35-7-126) › Section 35-7-116 - Custodian's expenses, compensation, and bond

(a)
A custodian is entitled to reimbursement from custodial property for reasonable expenses incurred in the performance of the custodian's duties.
(b)
Except for one who is a transferor under §
35-7-105
, a custodian has a noncumulative election during each calendar year to charge reasonable compensation for services performed during that year.
(c)
Except as provided in §
35-7-119(f)
, a custodian need not give a bond.
Acts 1992, ch. 664, § 1; T.C.A. § 35-7-216.