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Ch...478
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2002 LAWS OF MARYLAND
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(C) AFTER A TRUST IS CONVERTED TO A UNITRUST, ALL OF THE FOLLOWING
APPLY:
(1) THE INCOME OF THE TRUST THAT THE INCOME BENEFICIARY IS
ENTITLED TO RECEIVE UNDER THE GOVERNING INSTRUMENT SHALL BE AN ANNUAL
UNITRUST DISTRIBUTION EQUAL TO A PAYOUT PERCENTAGE OF 4% OF THE NET FAIR
MARKET VALUE OF THE TRUST'S ASSETS, WHETHER THOSE ASSETS WOULD BE
CONSIDERED INCOME OR PRINCIPAL UNDER ANY OTHER PROVISION OF THIS
SUBTITLE, AVERAGED OVER THE LESSER OF:
(I) THE 3 PRECEDING YEARS; OR
(II) THE PERIOD DURING WHICH THE TRUST HAS BEEN IN
EXISTENCE;
(2) EXPENSES THAT WOULD BE DEDUCTED FROM INCOME IF THE TRUST
WERE NOT A UNITRUST MAY NOT BE DEDUCTED FROM THE UNITRUST
DISTRIBUTION;
(3) ANY PROVISION IN THE GOVERNING INSTRUMENT DIRECTING OR
AUTHORIZING THE TRUSTEE TO DISTRIBUTE PRINCIPAL OR AUTHORIZING A
BENEFICIARY TO WITHDRAW A PORTION OR ALL OF THE PRINCIPAL MAY NOT BE
AFFECTED BY THE CONVERSION TO A UNITRUST;
(4) UNLESS OTHERWISE PROVIDED BY THE GOVERNING INSTRUMENT,
THE UNITRUST DISTRIBUTION SHALL BE PAID FIRST FROM NET INCOME OF THE
TRUST, AS NET INCOME WOULD BE DETERMINED IF THE TRUST WERE NOT A
UNITRUST, AND THEN FROM PRINCIPAL; AND
(5) THE TRUSTEE MAY DETERMINE TO ACCOUNT FOR THE UNITRUST
DISTRIBUTION IN ACCORDANCE WITH THE FOLLOWING RULES:
(I) TO THE EXTENT NET INCOME IS INSUFFICIENT, THE UNITRUST
DISTRIBUTION SHALL BE PAID FROM NET REALIZED SHORT-TERM CAPITAL GAINS;
(II) TO THE EXTENT INCOME AND NET REALIZED SHORT-TERM
CAPITAL GAINS ARE INSUFFICIENT, THE UNITRUST DISTRIBUTION SHALL BE PAID
FROM NET REALIZED LONG-TERM CAPITAL GAINS; AND
(III) TO THE EXTENT INCOME AND NET REALIZED SHORT-TERM AND
LONG-TERM CAPITAL GAINS ARE INSUFFICIENT, THE UNITRUST DISTRIBUTION
SHALL BE PAID FROM THE PRINCIPAL OF THE TRUST.
(D) THE TRUSTEE SHALL DETERMINE:
(1) THE EFFECT OF OTHER PAYMENTS FROM OR CONTRIBUTIONS TO
THE TRUST ON THE TRUST'S VALUATION;
(2) HOW FREQUENTLY TO VALUE NONLIQUID ASSETS AND WHETHER TO
ESTIMATE THEIR VALUE; AND
(3) WHETHER TO OMIT FROM THE CALCULATIONS TRUST PROPERTY
OCCUPIED OR POSSESSED BY A BENEFICIARY.
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- 3810 -
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