Express Total Return Unitrusts

1. Law
2. Georgia Code
3. Wills, Trusts, and Administration of Estates
4. Trusts
5. Trust Investments
6. Power of Adjustment and Unitrusts
7. Express Total Return Unitrusts

1. The following provisions shall apply to a trust which by its governing trust instrument requires the distribution at least annually of a unitrust amount equal to a fixed percentage of not less than 3 percent nor more than 5 percent per year of the net fair market value of the trust's assets, valued at least annually, such trust to be referred to as an "express total return unitrust":
   1. The unitrust amount may be determined by reference to the net fair market value of the trust's assets in one year or more than one year;
   2. Distribution of such a fixed percentage unitrust amount shall be considered a distribution of all of the income of the total return unitrust and shall not be considered a fundamental departure from applicable state law, regardless of whether the total return unitrust is created and governed by Code Section 53-12-362 or by the provisions of the governing trust instrument;
   3. Such a distribution of the fixed percentage of not less than 3 percent nor more than 5 percent shall be considered a reasonable apportionment of the total return of a total return unitrust;
   4. The governing trust instrument may grant discretion to the trustee to adopt a consistent practice of treating capital gains as part of the unitrust distribution, to the extent that the unitrust distribution exceeds the net accounting income, or it may specify the ordering of such classes of income;
   5. Unless the trust provisions specifically provide otherwise, or grant discretion to the trustee as set forth in paragraph (4) of this subsection, a distribution of the unitrust amount shall be considered to have been made from the following sources in order of priority:
      1. From net accounting income determined as if the trust were not a unitrust;
      2. From ordinary income not allocable to net accounting income;
      3. From net realized short-term capital gains;
      4. From net realized long-term capital gains; and
      5. From the principal of the trust estate; and
   6. The trust document may provide that assets used by the trust beneficiary, such as a residence property or tangible personal property, may be excluded from the net fair market value for computing the unitrust amount. Such use may be considered equivalent to the income or unitrust amount.
2. A trust which provides for a fixed percentage payout in excess of 5 percent per year shall be considered to have paid out all of the income of the total return unitrust and to have paid out principal of such trust to the extent that the fixed percentage payout exceeds 5 percent per year.
3. This Code section shall be effective for trusts established and wills executed on or after July 1, 2010.

(Code 1981, §53-12-364, enacted by Ga. L. 2010, p. 579, § 1/SB 131.)

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