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PARRIS N. GLENDENING, Governor
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H.B. 939
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OR CONVERT PROPERTY WITHIN A REASONABLE TIME. THE TRUSTEE MAY DECIDE
WHICH ACTION OR COMBINATION OF ACTIONS TO TAKE.
(B) IN CASES NOT GOVERNED BY SUBSECTION (A) OF THIS SECTION,
PROCEEDS FROM THE SALE OR OTHER DISPOSITION OF AN ASSET ARE PRINCIPAL
WITHOUT REGARD TO THE AMOUNT OF INCOME THE ASSET PRODUCES DURING ANY
ACCOUNTING PERIOD.
15-521. DERIVATIVES AND OPTIONS.
(A) IN 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 INDEX OF PRICES OR RATES, OR OTHER MARKET
INDICATOR FOR AN ASSET OR A GROUP OF ASSETS.
(B) TO THE EXTENT THAT A TRUSTEE DOES NOT ACCOUNT UNDER § 15-510 OF
THIS SUBTITLE FOR TRANSACTIONS IN DERIVATIVES, THE TRUSTEE SHALL
ALLOCATE TO PRINCIPAL RECEIPTS FROM AND DISBURSEMENTS MADE IN
CONNECTION WITH THOSE TRANSACTIONS.
(C) IF A TRUSTEE GRANTS AN OPTION TO BUY PROPERTY FROM THE TRUST,
WHETHER OR NOT THE TRUST OWNS THE PROPERTY WHEN THE OPTION IS
GRANTED, GRANTS AN OPTION THAT PERMITS ANOTHER PERSON TO SELL PROPERTY
TO THE TRUST, OR ACQUIRES AN OPTION TO BUY PROPERTY FOR THE TRUST OR AN
OPTION TO SELL AN ASSET OWNED BY THE TRUST, AND THE TRUSTEE OR OTHER
OWNER OF THE ASSET IS REQUIRED TO DELIVER THE ASSET IF THE OPTION IS
EXERCISED, AN AMOUNT RECEIVED FOR GRANTING THE OPTION SHALL BE
ALLOCATED TO PRINCIPAL. AN AMOUNT PAID TO ACQUIRE THE OPTION SHALL BE
PAID FROM PRINCIPAL. A GAIN OR LOSS REALIZED UPON THE EXERCISE OF AN
OPTION, INCLUDING AN OPTION GRANTED TO A SETTLOR OF THE TRUST FOR
SERVICES RENDERED, SHALL BE ALLOCATED TO PRINCIPAL.
15-522. ASSET-BACKED SECURITIES.
(A) (1) IN 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.
(2) "ASSET-BACKED SECURITY" 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.
(3) "ASSET-BACK SECURITY" DOES NOT INCLUDE AN ASSET TO WHICH §
15-508 OR § 15-516 OF THIS SUBTITLE APPLIES.
(B) IF A TRUST RECEIVES A PAYMENT FROM INTEREST OR OTHER CURRENT
RETURN AND FROM OTHER PROCEEDS OF THE COLLATERAL FINANCIAL ASSETS, THE
TRUSTEE SHALL ALLOCATE TO INCOME THE PORTION OF THE PAYMENT WHICH THE
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- 4627 -
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