(1) Subject to the provisions of section 15-1-455, an executor shall, at the time of distribution, pay over to the trustee of any trust, or to any other legatee to whom specific property other than money is bequeathed or devised, the net probate income of such property and shall pay over all other net probate income to:
The trustee of any trust created out of residue or to which any portion of residue isadded;
Any legatee for life or years of any portion of the residue;
Any legatee of a present, legal, possessory interest in any portion of the residue; and
Any trustee of a sum of money under a trust created or added to by the will but notpayable out of the residue, in pro rata shares, in accordance with the respective values of the property bequeathed or devised outright or in trust. The values shall be those finally determined for federal estate tax purposes, or, if no such determination is made, the values shall be those at date of death as determined by the executor. Nothing in this subsection (1) shall prevent a court from ordering distribution of any net probate income directly to the beneficiary of a trust.
If an executor makes a partial distribution of property to any legatee or trustee, therecipient of such partial distribution shall share in the net probate income collected to the date of distribution, but his or her share in the net probate income later collected by the executor shall be reduced accordingly.
The amount of any net probate income distributed by the executor to each trustee orother distributee shall be stated in any order of distribution.
A trustee who receives net probate income from an executor shall treat it as incomeof the trust for which he or she is acting.
If net probate income, with respect to which income taxes have been paid by theexecutor, is distributed, and any of the distributees is a charitable or other tax-exempt organization, and a charitable deduction was allowable on the income tax return of the executor for the taxable year of the executor in which the income was received or accrued, such income taxes paid by the executor shall be allocated among the distributees so that the diminution in such taxes resulting from the charitable deduction allowable to the executor will inure to the benefit of such charitable or exempt organization.
If net probate income with respect to which income taxes have been paid by theexecutor is distributed and includes tax-exempt or partially tax-exempt income or income with respect to which a credit or special deduction is allowable and the will requires such tax-exempt or partially tax-exempt income or income with respect to which a credit or special deduction is allowable to be distributed other than proportionately to the distributees of net probate income, such income taxes shall be allocated among the distributees so that the benefit of such tax exemption, partial tax exemption, credit, or special deduction will inure to the benefit of the distributee of such tax-exempt or partially tax-exempt income or of the income with respect to which a credit or special deduction is allowable.
If a trust, whether inter vivos or testamentary, contains provisions whereby, on thehappening or the failure to happen of an event, a gift is made of money in trust, or of specific property other than money, in trust or outright, or of any portion of the residue of such trust in further trust, or for life or years, the income of such trust for the period following the happening or failure to happen of such event shall be disposed of by the trustee thereof in the manner, so far as applicable, that would prevail if the trustee of such trust were an executor acting under the provisions of this section.
This section shall be effective with respect to wills the testators of which die on orafter April 18, 1961, to revocable inter vivos trusts the settlors of which die after said date, and to irrevocable inter vivos trusts which are created after said date.
Source: L. 2009: Entire section added, (HB 09-1241), ch. 169, p. 759, § 14, effective April 22.