Chapter 203D

Section 1. This chapter shall be known as and may be cited as The Massachusetts Principal and Income Act.

Section 10. (a) Except as otherwise provided in this section, a trustee shall allocate to income money received from an entity. (b) A trustee shall allocate the following receipts from an entity to principal: (1) property other than money; (2) money received in one distribution o…

Section 11. 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 …

Section 12. (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 truste…

Section 13. If not allocated to income, 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 pa…

Section 14. If 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…

Section 15. (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 prepayment of principal, shall be allocated to income without any provision for…

Section 16. (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 ag…

Section 17. If a trustee determines that an allocation between principal and income required by section 18, 19, 20, 21 or 24 is insubstantial, the trustee may allocate the entire amount to principal unless 1 of the circumstances described in subsection (c) of section 4 applies to…

Section 18. (a) If a payment is characterized as interest or a dividend or a payment made in lieu of interest or a dividend, a trustee shall allocate it to income. The trustee shall allocate to principal the balance of the payment and any other payment received in the same accoun…

Section 19. A trustee shall allocate to income 10 per cent of the receipts from a liquidating asset and the balance to principal.

Section 2. As used in this chapter, the following words shall, unless the context clearly requires otherwise, have the following meanings: ''Accounting period'', a calendar year unless another 12–month period is selected by a fiduciary. The term includes a portion of a calendar y…

Section 20. (a) If 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 shall be allocated…

Section 21. (a) If 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 if the amount of timber removed from the land does not exceed the rate of growth of the timber duri…

Section 22. (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 inc…

Section 23. (a) To the extent that a trustee does not account under section 12 for transactions in derivatives, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions. (b) If a trustee grants an option to buy property fr…

Section 24. (a) 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 retur…

Section 25. A trustee shall make the following disbursements from income if they are not disbursements to which clause (ii) or (iii) of paragraph (2) of section 6 applies: (1) so much of the regular compensation of the trustee and of any person providing investment advisory or cu…

Section 26. (a) A trustee shall make the following disbursements from principal: (1) such of the disbursements described in clause (1) of section 25 as are not charged to income; (2) all of the trustee's compensation calculated on principal as a fee for acceptance, distribution, …

Section 27. (a) 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 beneficia…

Section 28. If an amount chargeable to income is unusually large, a trustee may pay all or any part of such amount from principal and shall reimburse principal by transfers from income over a reasonable period of time.

Section 29. (a) A tax required to be paid by a trustee based on receipts allocated to income shall be paid from income. (b) A tax required to be paid by a trustee based on receipts allocated to principal shall be paid from principal, even if the tax is called an income tax by the…

Section 3. (a) In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of this chapter, a fiduciary: (1) shall administer a trust or estate in accordance with the terms of the trust or the will, even if there is…

Section 4. (a) A trustee may adjust between principal and income if the trustee considers it necessary if the trustee invests and manages trust assets as a prudent investor, the terms of the trust describe the amount that may or must be distributed to a beneficiary by referring t…

Section 5. (a) A court shall not change a trustee's decision to exercise or not to exercise a discretionary power conferred by this chapter unless it determines that the decision was an abuse of the trustee's discretion. A court shall not determine that a trustee abused his or he…

Section 6. After a decedent dies, in the case of an estate, or after an income interest in a trust ends, the following rules shall apply: (1) A fiduciary of an estate or of a terminating income interest shall determine the amount of net income and net principal receipts received …

Section 7. (a) Each beneficiary described in paragraph (4) of section 6 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 on…

Section 8. (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 i…

Section 8A. (a) A trustee shall allocate an income receipt or disbursement other than one to which paragraph (1) of section 6 applies to principal if its due date occurs on or before the date on which a decedent dies in the case of an estate or before an income interest begins in…

Section 9. (a) 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 inco…