Chapter 46 — Chapter 46

History: 1953 Comp., § 33-5-26, enacted by Laws 1969, ch. 239, § 9; repealed by Laws 2001, ch. 113, § 604.

Chapter 46, Article 3A NMSA 1978 may be cited as the "Uniform Principal and Income Act". History: Laws 2001, ch. 113, § 101; 2011, ch. 124, § 86.

As used in the Uniform Principal and Income Act: A. "accounting period" means a calendar year unless another twelve-month period is selected by a fiduciary. The term includes a portion of a calendar year or other twelve-month period that begins when an income interest begins or e…

(a) In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of Articles 2 [46-3A-201, 46-3A-202 NMSA 1978] and 3 [46-3A-301 to 46-3A-303 NMSA 1978], a fiduciary: (1) shall administer a trust or estate in accorda…

(a) A trustee may adjust between principal and income to the extent the trustee considers 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 to t…

A. Unless expressly prohibited by the governing instrument, a trustee may release the power to adjust as provided in Section 46-3A-104 NMSA 1978 or convert a trust to a total return trust as provided in this section if all of the following apply: (1) the trust describes the amoun…

A. During the period that a trust is a total return trust, the trustee shall administer the trust in accordance with the provisions of this section unless otherwise expressly provided by the terms of the trust. B. The trustee shall invest the trust assets seeking a total return w…

A. The trustee may determine any of the following matters in administering a total return trust as the trustee deems necessary or helpful for the proper functioning of the trust: (1) the effective date of a conversion to a total return trust pursuant to Section 46-3A-105 NMSA 197…

A. Expenses, taxes and other charges that would otherwise be deducted from income if the trust was not a total return trust may not be deducted from the distribution amount. B. Unless otherwise provided by the governing instrument, the distribution amount each year shall be deeme…

A. The distribution amount may not be less than the net income of the trust, determined without regard to the provisions of Sections 46-3A-105 through 46-3A-113 NMSA 1978, for a trust that was exempt, in whole or in part, from generation-skipping transfer tax on July 1, 2005 by r…

If a trustee is also a beneficiary of the trust and conversion or failure to convert would enhance or diminish the beneficial interest of that trustee, or if possession or exercise of the conversion power by a particular trustee alone would cause any individual to be treated as o…

A trustee may irrevocably release the power granted by the provisions of Sections 46-3A-105 through 46-3A-113 NMSA 1978 if the trustee reasonably believes the release is in the best interests of the trust and its beneficiaries. The release may be personal to the releasing trustee…

A. A trustee who reasonably and in good faith takes any action or omits to take any action pursuant to Sections 46-3A-105 through 46-3A-113 NMSA 1978 is not liable to any person interested in the trust. B. If a trustee reasonably and in good faith takes or omits to take any actio…

A. Sections 46-3A-105 through 46-3A-113 NMSA 1978 shall apply to trusts in existence on July 1, 2005 and to trusts created on or after that date. B. Sections 46-3A-105 through 46-3A-113 NMSA 1978 shall be construed to apply to the administration of a trust that is administered in…

After a decedent dies, in the case of an estate or after an income interest in a trust ends, the following rules 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 from property spec…

(a) Each beneficiary described in Section 201(4) [46-3A-201 NMSA 1978] 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…

(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 income inter…

decedent dies or income interest begins. (a) A trustee shall allocate an income receipt or disbursement other than one to which Section 201(1)[46-3A-201 NMSA 1978] applies to principal if its due date occurs before a decedent dies in the case of an estate or before an income inte…

(a) In 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 principal under th…

(a) As used in this section, "entity" means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund or any other organization in which a trustee has an interest other than a trust or estate to which Sect…

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 a trust or e…

(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 mainta…

A trustee shall allocate to principal: (1) to the extent not allocated to income under the Uniform Principal and Income Act, 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 cont…

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 …

(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…

(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 f…

If a trustee determines that an allocation between principal and income required by Section 409, 410, 411, 412 or 415 [46-3A-409, 46-3A-410, 46-3A-411, 46-3A-412 or 46- 3A-415 NMSA 1978] is insubstantial, the trustee may allocate the entire amount to principal unless one of the c…

A. As used in this section: (1) "payment" 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 payer in exchange for future payments. The term includes a p…

(a) As used 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 a leasehold, patent, copyright, royalty right and right to receive payments…

(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 alloca…

(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: (1) to income to the extent that the amount of timber removed from the land does not exceed the rate of growt…

(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 Se…

(a) As used 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 …

(a) As used 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. The term includes an asset that gives the owner the …

A trustee shall make the following disbursements from income to the extent that they are not disbursements to which Section 201(2)(B) or (C) [46-3A-201 NMSA 1978] applies: (1) one-half of the regular compensation of the trustee and of any person providing investment advisory or c…

(a) A trustee shall make the following disbursements from principal: (1) the remaining one-half of the disbursements described in Section 501(1) and (2) [46-3A-501 NMSA 1978]; (2) all of the trustee's compensation calculated on principal as a fee for acceptance, distribution or t…

(a) As used 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 year. (b) A trustee may transfer to principal a reasonable amount of the net cash receipts fro…

(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 or more accounting periods to reimburse principal or to provide a reserve for future principal disbursement…

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 authorit…

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 (…

In applying and construing the Uniform Principal and Income Act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it. History: Laws 2001, ch. 113, § 601.

If any provision of the Uniform Principal and Income Act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to thi…

existing trusts and estates. The Uniform Principal and Income Act applies to every trust or decedent's estate existing on the effective date of that act, except as otherwise expressly provided in the will or terms of the trust or in that act. History: Laws 2001, ch. 113, § 603.

Express trusts of real or personal property may be created by will or by declaration of trust by any person naming this state or any of its political subdivisions, municipalities or agencies as the beneficiary thereof. History: 1953 Comp., § 33-6-1, enacted by Laws 1957, ch. 171,…

The governor in behalf of the state, or any agency thereof or the governing body of any political subdivision named as beneficiary of a trust must approve and accept by appropriate act, resolution, order or ordinance the benefits to be bestowed by such trust. Before any such trus…

The instruments creating such express trusts shall be executed in such a manner as to be admitted to probate, if a will, and to recordation in the office of the county clerk in which the trust property is located if a declaration of trust, but they shall be of no effect or force …

and compensation; status of trustees; liability for acts. The instrument or will creating such trusts may provide for the appointment, succession, powers, duties, term and compensation of the trustee or trustees; and in all such respects the terms of said instrument or will shall…

The trusts created for the benefit of the state, its municipalities or political subdivisions or other entities, to be acceptable as set forth in Section 2 [46-4-2 NMSA 1978] of this enactment, must have as the purpose of the trust the furtherance or the providing of funds for th…

No funds of the beneficiary except those derived from the trust may be applied to carrying out or furtherance of the trust by the trustees, except by express action of the legislative authority of the beneficiary first had. History: 1953 Comp., § 33-6-6, enacted by Laws 1957, ch.…

The officers or any other governmental agencies or authorities having the custody, management or control of any property, real or personal or both, of the beneficiary of such trust, or of such a proposed trust, which property shall be needful for the execution of the trust purpos…