[Text of section applicable as provided by 2005, 129, Sec. 6.]
Section 2. As used in this chapter, the following words shall, unless the context clearly requires otherwise, have the following meanings:
“Accounting period”, a calendar year unless another 12-month period is selected by a fiduciary. The term includes a portion of a calendar year or other 12-month period that begins when an income interest begins or ends when an income interest ends.
“Asset-backed security”, 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 from the collateral financial assets only the interest or other current return or only the proceeds other than interest or current return. The term does not include an asset to which section 10 or 18 applies.
“Beneficiary”, includes, in the case of a decedent’s estate, an heir, legatee and devisee, and, in the case of a trust, an income beneficiary, a remainder beneficiary and any other distributee.
“Depreciation”, a reduction in value due to wear, tear, decay, corrosion, or gradual obsolescence of a fixed asset having a useful life of more than 1 year.
“Derivative”, 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 index of prices or rates, or other market indicator for an asset or a group of assets.
“Entity”, 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 section 11 applies, a business or activity to which section 12 applies, or an asset-backed security to which section 24 applies.
“Fiduciary”, a personal representative or a trustee. The term includes an executor, administrator, successor personal representative, special administrator, and a person performing substantially the same function.
“Income”, money or property that a fiduciary receives as current return from a principal asset. The term includes a portion of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided herein.
“Income beneficiary”, a person to whom net income of a trust is or may be payable.
“Income interest”, the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee’s discretion.
“Liquidating asset”, 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 during a period of more than 1 year under an arrangement that does not provide for the payment of interest on the unpaid balance. The term shall not include a payment subject to section 18, resources subject to section 20, timber subject to section 21, an activity subject to section 23, an asset subject to section 24, or any asset for which the trustee establishes a reserve for depreciation under section 27.
“Mandatory income interest”, the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.
“Net income”, the total receipts allocated to income during an accounting period minus the disbursements made from income during the period, plus or minus transfers under this chapter to or from income during the period.
“Payment”, a payment that a trustee may receive over a fixed number of years or during the life of 1 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, including a private or commercial annuity, an individual retirement account and a pension, profit-sharing, stock-bonus, or stock-ownership plan.
“Person”, an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government; governmental subdivision, agency or instrumentality; public corporation, or any other legal or commercial entity.
“Principal”, property held in trust for distribution to a remainder beneficiary when the trust terminates.
“Remainder beneficiary”, a person entitled to receive principal when an income interest ends.
“Terms of a trust”, the manifestation of the intent of a settlor or decedent with respect to the trust, expressed in a manner that admits of its proof in a judicial proceeding, whether by written or spoken words or by conduct.
“Trustee”, includes an original, additional or successor trustee, whether or not appointed or confirmed by a court.
“Undistributed income”, net income received before the date on which an income interest ends. It 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 the terms of the trust.