30-3135 Deferred compensation, annuities, and similar payments; allocation to principal and income. - Nebraska Statutes

30-3135. Deferred compensation, annuities,and similar payments; allocationto principal and income.(a) In this section:(1) Payment means a payment that a trustee mayreceive over a fixed number of years or during the life of one or more individualsbecause of services rendered or property transferred to the payer in exchangefor future payments. The term includes a payment made in money or propertyfrom the payer's general assets or from a separate fund created by the payer. For purposes of subsections (d), (e),(f), and (g) of this section, the term also includes any payment from anyseparate fund, regardless of the reason for the payment; and(2) Separate fund includes a private or commercialannuity, an individual retirement account, and a pension, profit-sharing,stock-bonus, or stock-ownership plan.(b) To the extent that a payment is characterized as interest, a dividend, ora payment made in lieu of interest or a dividend, a trustee shall allocate the payment to income. The trustee shall allocateto principal the balance of the payment and any other payment received inthe same accounting period that is not characterized as interest, a dividend,or an equivalent payment.(c) If no part of a payment is characterized as interest, a dividend,or an equivalent payment, and all or part of the payment is required to bemade, a trustee shall allocate to income ten percent of the part that is requiredto be made during the accounting period and the balance to principal. If nopart of a payment is required to be made or the payment received is the entireamount to which the trustee is entitled, the trustee shall allocate the entirepayment to principal. For purposes of this subsection, a payment is not requiredto be made to the extent that it is made because the trustee exercises a rightof withdrawal.(d) Except as otherwiseprovided in subsection (e) of this section, subsections (f) and (g) of thissection apply, and subsections (b) and (c) of this section do not apply, indetermining the allocation of a payment made from a separate fund to:(1) a trust to whichan election to qualify for a marital deduction under section 2056(b)(7) ofthe Internal Revenue Code of 1986, as amended, has been made; or(2) a trust that qualifiesfor the marital deduction under section 2056(b)(5) of the Internal RevenueCode of 1986, as amended.(e)Subsections (d), (f), and (g) of this section do not apply if and to the extentthat the series of payments would, without the application of subsection (d)of this section, qualify for the marital deduction under section 2056(b)(7)(C)of the Internal Revenue Code of 1986, as amended.(f) A trustee shall determine theinternal income of each separate fund for the accounting period as if theseparate fund were a trust subject to the Uniform Principal and Income Act.Upon request of the surviving spouse, the trustee shall demand that the personadministering the separate fund distribute the internal income to the trust.The trustee shall allocate a payment from the separate fund to income to theextent of the internal income of the separate fund and distribute that amountto the surviving spouse. The trustee shall allocate the balance of the paymentto principal. Upon request of the surviving spouse, the trustee shall allocateprincipal to income to the extent the internal income of the separate fundexceeds payments made from the separate fund to the trust during the accountingperiod.(g)If a trustee cannot determine the internal income of a separate fund but candetermine the value of the separate fund, the internal income of the separatefund is deemed to equal at least three percent of the fund's value, accordingto the most recent statement of value preceding the beginning of the accountingperiod. If the trustee can determine neither the internal income of the separatefund nor the fund's value, the internal income of the fund is deemed to equalthe product of the interest rate and the present value of the expected futurepayments, as determined under section 7520 of the Internal Revenue Code of1986, as amended, for the month preceding the accounting period for whichthe computation is made.(h) Thissection does not apply to a payment to which section 30-3136 applies. SourceLaws 2001, LB 56, § 20; Laws 2009, LB80, § 2.