Title XV, JUDICIAL BRANCH AND JUDICIAL PROCEDURES (Ch. 595 - 686D)

1. Each beneficiary described in section 637.201, subsection 4 , 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 distr…

1. 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 intere…

1. An income receipt or disbursement other than one to which section 637.201, subsection 1 , applies must be allocated 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 inc…

1. For purposes of 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 princ…

1. For purposes of this section , “entity” means a corporation, partnership, joint venture, limited liability company, regulated investment company, real estate investment trust, common trust fund, and any other organization in which a trustee has an interest other than a trust o…

1. Subject to the terms of a recipient trust, 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 shall be allocated to income. 2. An amount received as a distribution of principal from such a…

1. 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 maintai…

The following items must be allocated to principal: 1. To the extent not allocated to income under this chapter , assets received from any of the following sources: a. A transferor during the transferor’s lifetime. b. A decedent’s estate. c. A trust with a terminating income inte…

1. An amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease, must be allocated to income. 2. An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for…

1. 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…

1. Proceeds from a life insurance policy whose beneficiary is the trust or its trustee or a policy that insures the trust or its trustee against loss for the damage or destruction of, or loss of title to, a principal asset must be allocated to principal. Dividends received from a…

1. If a trustee determines that an allocation between principal and income required by sections 637.421 through 637.424 or section 637.427 is insubstantial, the trustee may allocate the entire receipt to principal. 2. An allocation is presumed to be insubstantial if either of the…

1. For purposes of this section , the following definitions shall apply: a. “Payments” means a payment that a trustee may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payor in exchan…

1. 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 leaseholds, patents, trademarks, copyrights, royalty rights, and rights to receive …

1. Receipts from an interest in minerals or other natural resources must be allocated according to the type of payment, as follows: a. If received as nominal delay rental or annual rent on a lease, a receipt must be allocated to income. b. If received from a production payment, a…

1. A trustee may account for net receipts from the sale of timber and related products under subsection 2 or section 637.403 or, if the trustee determines that net receipts are insubstantial, may allocate the net receipts to principal. The presumptions in section 637.420 apply in…

1. If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the surviving spouse with sufficient income from or use of the trust assets, the spouse may require the trustee to make property productive of inco…

1. For purposes of 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 grou…

1. For purposes of 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…

A trustee shall make disbursements from income, to the extent that they are not disbursements to which section 637.201, subsection 2 , paragraph “b” or “c” , applies, according to the following: 1. One-half of the regular compensation of the trustee and of any person providing in…

1. A trustee shall make disbursements from principal according to the following: a. The remaining one-half of the disbursements described in section 637.501, subsections 1 and 2 . b. All of the trustee’s compensation calculated on principal as an acceptance, distribution, or term…

1. For purposes of this section , “depreciation” means a reduction in value of a fixed asset having a useful life of more than one year due to wear, tear, decay, corrosion, or gradual obsolescence. 2. A trustee may transfer to principal a reasonable amount of the net cash receipt…

1. 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 disbursement…

1. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income. 2. 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 authorit…

1. 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 any of the following: a. Elections and decisions, other than those described in …

For purposes of this subchapter : 1. “Disinterested person” means a person who is not a related or subordinate party as defined in section 672(c) of the Internal Revenue Code with respect to the person acting as trustee of the trust and excludes the trustor of the trust and any i…

A trustee, other than an interested trustee, or, where two or more persons are acting as trustee, a majority of the trustees who are not interested trustees, may, in the trustee’s sole discretion and without the approval of the court, do any of the following subject to the requir…

A trustee may proceed to take action under section 637.602 if all of the following apply: 1. The trustee adopts a written policy for the trust as follows: a. In the case of a trust being administered as an income trust, requiring that future distributions from the trust will be u…

If there is no trustee of the trust other than an interested trustee, the interested trustee or, where two or more persons are acting as trustee and are interested trustees, a majority of such interested trustees may, in the trustee’s sole discretion and without the approval of t…

An interested trustee may proceed to take action under section 637.604 if all of the following apply: 1. The trustee adopts a written policy for the trust as follows: a. In the case of a trust being administered as an income trust, requiring that future distributions from the tru…

1. If any trustee desires to do any of the following but does not have the ability to or elects not to do so under the provisions of section 637.602 or 637.604 , the trustee may petition the court for such order as the trustee deems appropriate: a. Convert an income trust to a to…

The fair market value of the trust shall be determined at least annually, using such valuation date or dates or averages of valuation dates as are deemed appropriate. Assets for which a fair market value cannot be readily ascertained shall be valued using such valuation methods a…

The annual unitrust payout percentage shall be four percent unless the governing instrument specifically provides a different percentage or the court approves a percentage of not less than three percent or more than five percent after notice of intent to seek a payout percentage …

Following the conversion of an income trust to a total return unitrust, the trustee: 1. Shall treat the unitrust amount as if it were net income of the trust for purposes of determining the amount available, from time to time, for distribution from the trust. 2. Shall allocate an…

In administering a total return unitrust, the trustee may, in the trustee’s sole discretion but subject to the provisions of the governing instrument, determine all of the following: 1. The effective date of the conversion. 2. The timing of distributions, including provisions for…

Conversion to a total return unitrust under the provisions of this subchapter shall not affect any other provision of the governing instrument, if any, regarding distributions of principal. 2002 Acts, ch 1086, §16, 21 Referred to in §637.613

This subchapter shall be construed as pertaining to the administration of a trust and shall be available to any trust that is administered in Iowa under Iowa law unless any of the following apply: 1. The governing instrument reflects an intention that the current beneficiary or b…

Any trustee or disinterested person who in good faith takes or fails to take any action under this subchapter shall not be liable to any person affected by such action or inaction, regardless of whether such person received written notice as provided in this subchapter and regard…

This subchapter takes effect April 5, 2002, and applies to trusts in existence on that date or created after that date. 2002 Acts, ch 1086, §19, 21 Referred to in §637.613

This chapter applies to every trust or decedent’s estate on and after July 1, 2000, except as otherwise expressly provided in the will, the terms of the trust, or this chapter . Notwithstanding any Code provision to the contrary, the provisions of this chapter shall prevail over …