(a) 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 payment made in money or property from 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 any separate fund,
regardless of the reason for the payment.
(2) "Separate fund" includes a private or commercial
annuity, 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, or a payment made in lieu of interest or a
dividend, a trustee shall allocate the payment to income. The
trustee shall allocate to principal the balance of the payment
and any other payment received in the 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, a trustee shall allocate to
income four percent of the total value of the interests of the
trustee in the plan, annuity, or similar payment according to the
most recent statement of value preceding the beginning of the
accounting period and the balance to principal.
(d) Except as otherwise provided in subsection (e) of this
section, subsections (f) and (g) of this section apply, and
subsections (b) and (c) of this section do not apply, in
determining the allocation of a payment made from a separate fund
to:
(1) A trust to which an election to qualify for a marital
deduction under 26 U.S.C. Sec. 2056(b)(7) of the federal internal
revenue code of 1986, as amended as of July 26, 2009, has been
made; or
(2) A trust that qualifies for the marital deduction under
26 U.S.C. Sec. 2056(b)(5) of the federal internal revenue code of
1986, as amended as of July 26, 2009.
(e) Subsections (d), (f), and (g) of this section do not
apply if and to the extent that the series of payments would,
without the application of subsection (d) of this section,
qualify for the marital deduction under 26 U.S.C. Sec.
2056(b)(7)(C) of the federal internal revenue code of 1986, as
amended as of July 26, 2009.
(f) A trustee shall determine the internal income of each
separate fund for the accounting period as if the separate fund
were a trust subject to this section. Upon request of the
surviving spouse, the trustee shall demand that the person
administering the separate fund distribute the internal income to
the trust. The trustee shall allocate a payment from the
separate fund to income to the extent of the internal income of
the separate fund and distribute that amount to the surviving
spouse. The trustee shall allocate the balance of the payment to
principal. Upon request of the surviving spouse, the trustee
shall allocate principal to income to the extent the internal
income of the separate fund exceeds payments made from the
separate fund to the trust during the accounting period.
(g) If a trustee cannot determine the internal income of a
separate fund but can determine the value of the separate fund,
the internal income of the separate fund is deemed to equal four
percent of the fund's value, according to the most recent
statement of value preceding the beginning of the accounting
period. If the trustee can determine neither the internal income
of the separate fund nor the fund's value, the internal income of
the fund is deemed to equal the product of the interest rate and
the present value of the expected future payments, as determined
under 26 U.S.C. Sec. 7520 of the federal internal revenue code of
1986, as amended as of July 26, 2009, for the month preceding the
accounting period for which the computation is made.
(h) This section does not apply to a payment to which RCW 11.104A.190 applies.
[2009 c 365 § 1; 2002 c 345 § 409.]