Iowa Code § 637.101
Short title
This Act may be cited as the “Uniform Principal and Income Act”.
Iowa Code Chapter 637 — Uniform Principal and Income Act
Iowa · statute · Iowa Code ch. 637 · 44 active provisions
Iowa Code § 637.102
Definitions
As used in this chapter: 1. “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 ends when an income interest ends. 2. “Beneficiary” includes, in…
Iowa Code § 637.103
Fiduciary duties — general principles
1. In allocating receipts and disbursements to or between principal and income, and in any matter within the scope of subchapters II and III, a fiduciary shall do all of the following: a. Administer a trust or estate in accordance with the terms of the trust or the will, even if there is a different provision in this c…
Iowa Code § 637.201
Determination and distribution of net income
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 a terminating income interest shall determine the amount of net income and net principal receipts received from property specifically given to a beneficiary under the r…
Iowa Code § 637.202
Distribution to residuary and remainder beneficiaries
1. Each beneficiary described in section 637.201, subsection 4, 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 distribution of assets to beneficiaries to who…
Iowa Code § 637.301
When right to income begins and ends
1. 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 interest. 2. An asset becomes subject to a tru…
Iowa Code § 637.302
Apportionment of receipts and disbursements when decedent dies or income interest begins
1. An income receipt or disbursement other than one to which section 637.201, subsection 1, applies must be allocated to principal if its due date occurs before a decedent dies in the case of an estate, or before an income interest begins in the case of a trust or successive income interest. 2. An income receipt or dis…
Iowa Code § 637.303
Apportionment when income interest ends
1. For purposes of 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 pursuant to the terms of the trust.…
Iowa Code § 637.401
Character of receipts
1. For purposes of this section, “entity” means a corporation, partnership, joint venture, limited liability company, regulated investment company, real estate investment trust, common trust fund, and any other organization in which a trustee has an interest other than a trust or estate to which section 637.402 applies…
Iowa Code § 637.402
Distribution from trust or estate
1. Subject to the terms of a recipient trust, 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 shall be allocated to income. 2. An amount received as a distribution of principal from such a trust or estate shall be allocated to p…
Iowa Code § 637.403
Business and other activities conducted by trustee
1. 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 maintain separate accounting records for its tr…
Iowa Code § 637.410
Principal receipts
The following items must be allocated to principal: 1. To the extent not allocated to income under this chapter, assets received from any of the following sources: a. A transferor during the transferor’s lifetime. b. A decedent’s estate. c. A trust with a terminating income interest. d. A payor pursuant to a contract n…
Iowa Code § 637.411
Rental property
1. An amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease, must be allocated to income. 2. An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for future periods, must be added to princi…
Iowa Code § 637.412
Obligation to pay money
1. 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 premium. 2. An amount received from the…
Iowa Code § 637.413
Insurance policies and similar contracts
1. Proceeds from a life insurance policy whose beneficiary is the trust or its trustee or a policy that insures the trust or its trustee against loss for the damage or destruction of, or loss of title to, a principal asset must be allocated to principal. Dividends received from an insurance policy and the proceeds of a…
Iowa Code § 637.420
Insubstantial allocations not required
1. If a trustee determines that an allocation between principal and income required by sections 637.421 through 637.424 or section 637.427 is insubstantial, the trustee may allocate the entire receipt to principal. 2. An allocation is presumed to be insubstantial if either of the following would be true if an allocatio…
Iowa Code § 637.421
Deferred compensation, annuities, and similar payments
1. For purposes of this section, the following definitions shall apply: a. “Payments” 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 payor in exchange for future payments. “Payments” includ…
Iowa Code § 637.422
Liquidating asset
1. 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 leaseholds, patents, trademarks, copyrights, royalty rights, and rights to receive payments during a period of more than one…
Iowa Code § 637.423
Minerals, water, and other natural resources
1. Receipts from an interest in minerals or other natural resources must be allocated according to the type of payment, as follows: a. If received as nominal delay rental or annual rent on a lease, a receipt must be allocated to income. b. If received from a production payment, a receipt must be allocated to income to…
Iowa Code § 637.424
Timber
1. A trustee may account for net receipts from the sale of timber and related products under subsection 2 or section 637.403 or, if the trustee determines that net receipts are insubstantial, may allocate the net receipts to principal. The presumptions in section 637.420 apply in determining whether net receipts are in…
Iowa Code § 637.425
Property not productive of income
1. If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the surviving spouse with sufficient income from or use of the trust assets, the spouse may require the trustee to make property productive of income or convert property within a reasonab…
Iowa Code § 637.426
Derivatives and options
1. For purposes of 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 assets, or changes in a rate, an ind…
Iowa Code § 637.427
Asset-backed securities
1. For purposes of 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 right to receive only the interest o…
Iowa Code § 637.501
Disbursements from income
A trustee shall make disbursements from income, to the extent that they are not disbursements to which section 637.201, subsection 2, paragraph “b” or “c”, applies, according to the following: 1. One-half of the regular compensation of the trustee and of any person providing investment advisory or custodial services to…
Iowa Code § 637.502
Disbursements from principal
1. A trustee shall make disbursements from principal according to the following: a. The remaining one-half of the disbursements described in section 637.501, subsections 1 and 2. b. All of the trustee’s compensation calculated on principal as an acceptance, distribution, or termination fee, and disbursements made to pr…
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