58-9-414. Derivatives and options. - Kansas Statutes

58-9-414

Chapter 58.--PERSONAL AND REAL PROPERTY Part 4.--ALLOCATION OF RECEIPTS DURING ADMINISTRATION OF TRUST Article 9.--UNIFORM PRINCIPAL AND INCOME ACT (1997)

      58-9-414.   Derivatives and options.(a) As used in this section, "derivative" means a contractorfinancial instrument ora combination of contracts and financial instruments which gives a trust theright orobligation to participate in some or all changes in the price of a tangible orintangible asset or group of assets, or changes in a rate, an index of pricesor rates,or other market indicator for an asset or a group of assets.

      (b)   To the extent that a trustee does not account under K.S.A. 58-9-403 andamendments thereto fortransactions in derivatives, the trustee shall allocate to principal receiptsfrom anddisbursements made in connection with those transactions.

      (c)   If a trustee grants an option to buy property from the trust, whetherornot the trust owns the property when the option is granted, grants an optionthat permits another person to sell property to the trust, or acquires anoption to buy property for the trust or an optionto sell an asset owned by the trust, and the trusteeor other owner of the asset is required to deliver the asset if the option isexercised,an amount received for granting the option must be allocated to principal. Anamount paid to acquire the option must be paid from principal. A gain or lossrealized upon the exercise of an option, including an option granted to asettlor ofthe trust for services rendered, must be allocated to principal.

      History:   L. 2000, ch. 61, § 23; July 1.