Missouri Statute | Act | Code |Trusts And Estates Of Decedents And Persons Under Disability| US Code - US Statute

Any individual to whom property or an interest therein is
donatively transferred by any means, including a transfer resulting from
another disclaimer, may disclaim all or any portion of the transfer.
Unless the terms of the transfer otherwise provide, the disclaimer shall
cause the terms of the transfer to be applied to the disclaimed transfer
and to any future interests taking effect thereafter as if the
disclaimant had died immediately before the transfer. The presumption of
a disclaimant's death does not prevent recognition of the disclaimant's
later born children and their issue, assuming they have rights after all
proper acceleration has taken place, nor does it prevent recognition of
future and other interests of the disclaimant which are not disclaimed.
For all purposes the disclaimed interest is deemed to have passed
directly from the transferor to the ultimate taker or takers and is not
subject to the claim of any creditor of the disclaimant. A disclaimed
portion of a transfer passes to the same ultimate taker or takers and in
the same proportions as in the case of a disclaimer of all of the
transfer. (L. 1997 S.B. 265)

1. A disclaimer is made by a writing showing an unconditional
refusal to accept a transfer, or a portion thereof, signed by the
disclaimant, or representative, and delivered on or before nine months
after the transfer, or by any later time provided in the particular case
or pursuant to other provisions of this chapter, and before any
acceptance of the disclaimed interest. Delivery of a disclaimer may be
accomplished by delivery to the transferor, the transferor's personal
representative or other legal representative, or the holder of the legal
title to the property to which the interest related. A disclaimer
involving an estate or property within the jurisdiction of the probate
division of a circuit court may be filed in that division.

2. The right to disclaim exists notwithstanding any intention to the
contrary expressed by the transferor and notwithstanding any limitation
on the disclaimant such as a spendthrift provision or similar
restriction. (L. 1997 S.B. 265)

1. Except as otherwise provided in sections 469.090 and 469.100,
acceptance of a transferred interest or a portion thereof may be shown by
conduct, including acceptance of benefits. Acceptance precludes any later
disclaimer.

2. A disclaimer or acceptance may be made on a person's behalf by the
person's representative who may be an authorized agent, the guardian or
conservator of a minor or disabled person, or the personal representative
of a deceased person. (L. 1997 S.B. 265)

A transfer that is subject to the transferor's power to revoke
is not a transfer for purposes of this chapter unless such power is
released or extinguished. (L. 1997 S.B. 265)

Each separate interest in property is subject to disclaimer or
acceptance and each separate interest, including any specific amount,
part, fraction or asset thereof, or formula amount based on present or
future facts independent of the disclaimant's volition, is subject to
disclaimer or acceptance. (L. 1997 S.B. 265)

A power with respect to property shall be treated as an interest
in such property and if releasable shall be disclaimable in whole or in
part under the provisions of this chapter by the holder of the power. An
individual who is a potential object of a power exercise has an interest
in the property that is disclaimable in whole or in part. (L. 1997 S.B.
265)

A contingent future interest may be disclaimed in whole or in
part under the provisions of this chapter at any time before, or within
nine months after, beneficiaries of the interest have been fully
ascertained and their interests vested. A vested interest subject to
defeasance or divestment shall be deemed a contingent interest for
purposes of this chapter. (L. 1997 S.B. 265)

In the case of a per stirpes distribution or vesting, either
under an instrument or by operation of law, a prior or subsequent
disclaimer by an individual living at the time of the transfer or vesting
does not change the stocks that are to be used as the basis of the
division between beneficiaries of succeeding generations. (L. 1997 S.B.
265)

The following rules set forth in subdivisions (1) and (2) of
this section shall apply in the case of a vested interest or vested
future interest created by a transfer made before 1977, and may apply in
such case to lengthen, but shall not shorten, the time for disclaimer
otherwise available:

(1) Such interest is subject to disclaimer in whole or in part for a
reasonable time after the disclaimant has knowledge of the existence of
the transfer;

(2) If the interest has vested before the disclaimant's eighteenth
birthday, and the disclaimant has knowledge of the existence of the
transfer before the disclaimant's eighteenth birthday, such interest is
subject to disclaimer in whole or in part until a reasonable time elapses
after the disclaimant's eighteenth birthday, except that a written
acceptance by the disclaimant's representative shall constitute an
acceptance of any portion of the interest. (L. 1997 S.B. 265)

In the case of a transfer made after 1976 creating an interest
or future interest that has vested in a person before such person's
twenty-first birthday, such interest shall be subject to disclaimer as
provided in this chapter until nine months after the person's
twenty-first birthday. No act or conduct of the person prior to such
twenty-first birthday, other than a written acceptance, shall constitute
an acceptance of any portion of the interest. (L. 1997 S.B. 265)

This chapter does not abridge or affect the right of any person
to transfer, release, disclaim or renounce any property, interest or
power, or elect against a will, under any other statute or under the
common law. (L. 1997 S.B. 265)

This chapter shall be effective with respect to any disclaimer
made after August 13, 1982, except that rights which have vested pursuant
to any such disclaimer shall not be disturbed by the provisions of this
chapter. (L. 1997 S.B. 265)

1. In sections 469.240 to 469.350 unless the context or subject
matter otherwise requires:

(1) "Bank" includes any person or association of persons, whether
incorporated or not, carrying on the business of banking;

(2) "Fiduciary" includes a trustee under any trust, expressed, implied,
resulting or constructive, executor, administrator, guardian,
conservator, curator, receiver, trustee in bankruptcy, assignee for the
benefit of creditors, partner, agent, officer of a corporation, public or
private, public officer, or any other person acting in a fiduciary
capacity for any person, trust or estate;

(3) "Person" includes a corporation, partnership, or other association,
or two or more persons having a joint or common interest;

(4) "Principal" includes any person to whom a fiduciary as such owes an
obligation.

2. A thing is done "in good faith" within the meaning of sections 469.240
to 469.350, when it is in fact done honestly, whether it be done
negligently or not. (L. 1959 S.B. 121 § 1, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.240

A person who in good faith pays or transfers to a fiduciary or
to any other person as directed by a fiduciary any money or other
property which the fiduciary as such is authorized to receive, is not
responsible for the proper application thereof by the fiduciary, and any
right or title acquired from the fiduciary in consideration of such
payment or transfer is not invalid in consequence of a misapplication by
the fiduciary. (L. 1959 S.B. 121 § 2, A.L. 1991 S.B. 352, A.L. 2004 H.B.
1511)

Effective 7-10-91

*Transferred 2004; formerly 456.250

CROSS REFERENCE: Transfer of corporate securities by fiduciary, rights of
corporation or agency, RSMo 403.250 to 430.350

If any negotiable instrument payable or endorsed to a fiduciary
as such is endorsed by the fiduciary, or if any negotiable instrument
payable or endorsed to his principal is endorsed by a fiduciary empowered
to endorse such instrument on behalf of his principal, the endorsee is
not bound to inquire whether the fiduciary is committing a breach of his
obligation as fiduciary in endorsing or delivering the instrument, and is
not chargeable with notice that the fiduciary is committing a breach of
his obligation as fiduciary unless he takes the instrument with actual
knowledge of such breach or with knowledge of such facts that his action
in taking the instrument amounts to bad faith. If, however, such
instrument is transferred by the fiduciary in payment of or as security
for a personal debt of the fiduciary to the actual knowledge of the
creditor, or is transferred in any transaction known by the transferee to
be for the personal benefit of the fiduciary, the creditor or other
transferee is liable to the principal if the fiduciary in fact commits a
breach of his obligation as fiduciary in transferring the instrument. (L.
1959 S.B. 121 § 4, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.260

If a check or other bill of exchange is drawn by a fiduciary as
such, or in the name of his principal by a fiduciary empowered to draw
such instrument in the name of his principal, the payee is not bound to
inquire whether the fiduciary is committing a breach of his obligation as
fiduciary in drawing or delivering the instrument, and is not chargeable
with notice that the fiduciary is committing a breach of his obligation
as fiduciary unless he takes the instrument with actual knowledge of such
breach or with knowledge of such facts that this action in taking the
instrument amounts to bad faith. If, however, such instrument is payable
to a personal creditor of the fiduciary and delivered to the creditor in
payment of or as security for a personal debt of the fiduciary to the
actual knowledge of the creditor, or is drawn and delivered in any
transaction known by the payee to be for the personal benefit of the
fiduciary, the creditor or other payee is liable to the principal if the
fiduciary in fact commits a breach of his obligation as fiduciary in
drawing or delivering the instrument. (L. 1959 S.B. 121 § 5, A.L. 2004
H.B. 1511)

*Transferred 2004; formerly 456.270

If a check or other bill of exchange is drawn by a fiduciary as
such or in the name of his principal by a fiduciary empowered to draw
such instrument in the name of his principal, payable to the fiduciary
personally, or payable to a third person and by him transferred to the
fiduciary, and is thereafter transferred by the fiduciary, whether in
payment of a personal debt of the fiduciary or otherwise, the transferee
is not bound to inquire whether the fiduciary is committing a breach of
his obligation as fiduciary in transferring the instrument, and is not
chargeable with notice that the fiduciary is committing a breach of his
obligation as fiduciary unless he takes the instrument with actual
knowledge of such breach or with knowledge of such facts that his action
in taking the instrument amounts to bad faith. (L. 1959 S.B. 121 § 6,
A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.280

If a deposit is made in a bank to the credit of a fiduciary as
such, the bank is authorized to pay the amount of the deposit or any part
thereof upon the check of the fiduciary, signed with the name in which
such deposit is entered, without being liable to the principal, unless
the bank pays the check with actual knowledge that the fiduciary is
committing a breach of his obligation as fiduciary in drawing the check
or with knowledge of such facts that its action in paying the check
amounts to bad faith. If, however, such a check is payable to the drawee
bank and is delivered to it in payment of or as security for a personal
debt of the fiduciary to it, the bank is liable to the principal if the
fiduciary in fact commits a breach of his obligation as fiduciary in
drawing or delivering the check. (L. 1959 S.B. 121 § 7, A.L. 2004 H.B.
1511)

*Transferred 2004; formerly 456.290

If a check is drawn upon the account of his principal in a bank
by a fiduciary who is empowered to draw checks upon his principal's
account, the bank is authorized to pay such check without being liable to
the principal, unless the bank pays the check with actual knowledge that
the fiduciary is committing a breach of his obligation as fiduciary in
drawing such check, or with knowledge of such facts that its action in
paying the check amounts to bad faith. If, however, such a check is
payable to the drawee bank and is delivered to it in payment of or as
security for a personal debt of the fiduciary to it, the bank is liable
to the principal if the fiduciary in fact commits a breach of his
obligation as fiduciary in drawing or delivering the check. (L. 1959 S.B.
121 § 8, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.300

If a fiduciary makes a deposit in a bank to his personal credit
of checks drawn by him upon an account in his own name as fiduciary, or
of checks payable to him as fiduciary, or of checks drawn by him upon an
account in the name of his principal if he is empowered to draw checks
thereon, or of checks payable to his principal and endorsed by him, if he
is empowered to endorse such checks, or if he otherwise makes a deposit
of funds held by him as fiduciary, the bank receiving such deposit is not
bound to inquire whether the fiduciary is committing thereby a breach of
his obligation as fiduciary; and the bank is authorized to pay the amount
of the deposit or any part thereof upon the personal check of the
fiduciary without being liable to the principal, unless the bank receives
the deposit or pays the check with actual knowledge that the fiduciary is
committing a breach of his obligation as fiduciary in making such deposit
or in drawing such check, or with knowledge of such facts that its action
in receiving the deposit or paying the check amounts to bad faith. (L.
1959 S.B. 121 § 9, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.310

When a deposit is made in a bank in the name of two or more
persons as trustees and a check is drawn upon the trust account by any
trustee or trustees authorized by the other trustee or trustees to draw
checks upon the trust account, neither the payee nor other holder nor the
bank is bound to inquire whether it is a breach of trust to authorize
such trustee or trustees to draw checks upon the trust account, and is
not liable unless the circumstances be such that the action of the payee
or other holder or the bank amounts to bad faith. (L. 2004 S.B. 121 § 10,
A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.320

In any case not provided for in sections 469.240 to 469.350 the
rules of law and equity, including the law merchant and those rules of
law and equity relating to trusts, agency, negotiable instruments and
banking, shall continue to apply. (L. 1959 S.B. 121 § 11, A.L. 2004 H.B.
1511)

*Transferred 2004; formerly 456.330

This law shall be so interpreted and construed as to effectuate
its general purpose to make uniform the law of those states which enact
it. (L. 1959 S.B. 121 § 12, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.340

Sections 469.240 to 469.350 may be cited as the "Uniform
Fiduciaries Law". (L. 1959 S.B. 121 § 13, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.350

As used in sections 469.401 to 469.467, the following terms mean:

(1) "Accounting period", 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", an heir, legatee and devisee of a decedent's estate,
and an income beneficiary and a remainder beneficiary of a trust,
including any type of entity that has a beneficial interest in either an
estate or a trust;

(3) "Fiduciary", a personal representative, trustee, executor,
administrator, successor personal representative, special administrator
and any other person performing substantially the same function;

(4) "Income", money or property that a fiduciary receives as current
return from a principal asset, including a portion of receipts from a
sale, exchange or liquidation of a principal asset, as provided in
sections 469.423 to 469.449;

(5) "Income beneficiary", a person to whom net income of a trust is or
may be payable;

(6) "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;

(7) "Mandatory income interest", the right of an income beneficiary to
receive net income that the terms of the trust require the fiduciary to
distribute;

(8) "Net income", if section 469.411 applies to the trust, the unitrust
amount, or if section 469.411 does not apply to the trust, the total
receipts allocated to income during an accounting period minus the
disbursements made from income during the same period, plus or minus
transfers pursuant to sections 469.401 to 469.467 to or from income
during the same period;

(9) "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;

(10) "Principal", property held in trust for distribution to a remainder
beneficiary when the trust terminates;

(11) "Qualified beneficiary", a beneficiary defined in section 456.1-
103, RSMo;

(12) "Remainder beneficiary", a person entitled to receive principal when
an income interest ends;

(13) "Terms of a trust", the manifestation of the settlor's or decedent's
intent expressed in a manner which is admissible as proof in a judicial
proceeding, whether by written or spoken words or by conduct;

(14) "Trustee", an original, additional or successor trustee, whether or
not appointed or confirmed by a court;

(15) "Unitrust amount", net income as defined by section 469.411. (L.
2001 H.B. 241, A.L. 2004 H.B. 1511)

The provisions of sections 456.3-301 to 456.3-305, RSMo, shall
apply to sections 469.401 to 469.467 for all purposes. (L. 2004 H.B. 1511)

1. In allocating receipts and disbursements to or between
principal and income, and with respect to any matter within the scope of
sections 469.413 to 469.421, a fiduciary:

(1) Shall administer a trust or estate under the terms of the trust or
the will, even if there is a different provision in sections 469.401 to
469.467;

(2) May administer a trust or estate by exercising a discretionary power
of administration given to the fiduciary by the terms of the trust or the
will, even if the exercise of the power produces a result different from
a result required or permitted by sections 469.401 to 469.467;

(3) Shall administer a trust or estate pursuant to sections 469.401 to
469.467 if the terms of the trust or the will do not contain a different
provision or do not give the fiduciary a discretionary power of
administration; and

(4) Shall add a receipt or charge a disbursement to principal to the
extent that the terms of the trust and sections 469.401 to 469.467 do not
provide a rule for allocating the receipt or disbursement to or between
principal and income.

2. In exercising the power to adjust pursuant to section 469.405 or a
discretionary power of administration regarding a matter within the scope
of sections 469.401 to 469.467, whether granted by the terms of a trust,
a will, or sections 469.401 to 469.467, a fiduciary shall administer a
trust or estate impartially, based on what is fair and reasonable to all
of the beneficiaries, except to the extent that the terms of the trust or
the will clearly manifest an intent that the fiduciary shall or may favor
one or more of the beneficiaries. A determination in accordance with
sections 469.401 to 469.467 is presumed to be fair and reasonable to all
of the beneficiaries. (L. 2001 H.B. 241)

1. A trustee may adjust between principal and income to the
extent the trustee considers necessary if the trustee invests and manages
trust assets as a prudent investor, the terms of the trust describe the
amount that may or shall be distributed to a beneficiary by referring to
the trust's income, and the trustee determines, after applying subsection
1 of section 469.403, that the trustee is unable to comply with
subsection 2 of section 469.403.

2. In deciding whether and to what extent to exercise the power conferred
by subsection 1 of this section, a trustee shall consider all factors
relevant to the trust and its beneficiaries, including the following
factors to the extent relevant:

(1) The nature, purpose and expected duration of the trust;

(2) The intent of the settlor;

(3) The identity and circumstances of the beneficiaries;

(4) The needs for liquidity, regularity of income, and preservation and
appreciation of capital;

(5) The assets held in the trust, including the extent to which such
assets consist of financial assets, interests in closely held
enterprises, tangible and intangible personal property, or real property,
and the extent to which such assets are used by a beneficiary, and
whether such assets were purchased by the trustee or received from the
settlor;

(6) The net amount allocated to income pursuant to sections 469.401 to
469.467, other than this section, and the increase or decrease in the
value of the principal assets, which the trustee may estimate as to
assets for which market values are not readily available;

(7) Whether and to what extent the terms of the trust give the trustee
the power to invade principal or accumulate income, or prohibit the
trustee from invading principal or accumulating income, and the extent to
which the trustee has exercised a power from time to time to invade
principal or accumulate income;

(8) The actual and anticipated effect of economic conditions on principal
and income and effects of inflation and deflation; and

(9) The anticipated tax consequences of an adjustment.

3. A trustee may not make an adjustment:

(1) That diminishes the income interest in a trust which requires all of
the income to be paid at least annually to a spouse and for which an
estate tax or gift tax marital deduction would be allowed, in whole or in
part, if the trustee did not have the power to make the adjustment;

(2) That reduces the actuarial value of the income interest in a trust to
which a person transfers property with the intent to qualify for a gift
tax exclusion;

(3) That changes the amount payable to a beneficiary as a fixed annuity
or a fixed fraction of the value of the trust assets;

(4) From any amount that is permanently set aside for charitable purposes
under a will or the terms of a trust to the extent that the existence of
the power to adjust would change the character of the amount set aside
for federal income, gift or estate tax purposes;

(5) If possessing or exercising the power to make an adjustment causes an
individual to be treated as the owner of all or part of the trust for
income tax purposes, and the individual would not be treated as the owner
if the trustee did not possess the power to make an adjustment;

(6) If possessing or exercising the power to make an adjustment causes
all or part of the trust assets to be included for estate tax purposes in
the estate of an individual who has the power to remove or appoint a
trustee, or both, and the assets would not be included in the estate of
the individual if the trustee did not possess the power to make an
adjustment;

(7) If the trustee is a beneficiary of the trust; or

(8) If the trustee is not a beneficiary, but the adjustment would benefit
the trustee directly or indirectly.

4. If subdivision (5), (6), (7) or (8) of subsection 3 of this section
applies to a trustee and there is more than one trustee, a cotrustee to
whom the provision does not apply may make the adjustment unless the
exercise of the power by the remaining trustee or trustees is not
permitted by the terms of the trust.

5. A trustee may release the entire power conferred by subsection 1 of
this section, or may release only the power to adjust from income to
principal or the power to adjust from principal to income if the trustee
is uncertain about whether possessing or exercising the power will cause
a result described in subdivisions (1) to (6) or subdivision (8) of
subsection 3 of this section, or if the trustee determines that
possessing or exercising the power will or may deprive the trust of a tax
benefit or impose a tax burden not described in subsection 3 of this
section. The release may be permanent or for a specified period,
including a period measured by the life of an individual.

6. Terms of a trust that limit the power of a trustee to make an
adjustment between principal and income do not affect the application of
this section unless it is clear from the terms of the trust that the
terms are intended to deny the trustee the power of adjustment conferred
by subsection 1 of this section. (L. 2001 H.B. 241)

1. Any claim for breach of a trustee's duty to impartially
administer a trust related, directly or indirectly, to an adjustment made
by a fiduciary to the allocation between principal and income pursuant to
subsection 1 of section 469.405 or any allocation made by the fiduciary
pursuant to any authority or discretion specified in subsection 1 of
section 469.403, unless previously barred by adjudication, consent or
other limitation, shall be barred as provided in this section.

(1) Any such claim brought by a qualified beneficiary is barred if not
asserted in a judicial proceeding commenced within two years after the
trustee has sent a report to that qualified beneficiary that adequately
discloses the facts constituting the claim.

(2) Any such claim brought by a beneficiary (other than a qualified
beneficiary) with any interest whatsoever in the trust, no matter how
remote or contingent, or whether or not the beneficiary is ascertainable
or has the capacity to contract, is barred if not asserted in a judicial
proceeding commenced within two years after the first to occur of:

(a) The date the trustee sent a report to all qualified beneficiaries
that adequately discloses the facts constituting the claim; or

(b) The date the trustee sent a report to a person that represents the
beneficiary under the provisions of subdivision (2) of subsection 2 of
this section.

2. For purposes of this section the following rules shall apply:

(1) A report adequately discloses the facts constituting a claim if it
provides sufficient information so that the beneficiary should know of
the claim or reasonably should have inquired into its existence;

(2) Section 469.402 shall apply in determining whether a beneficiary
(including a qualified beneficiary) has received notice for purposes of
this section;

(3) The determination of the identity of all qualified beneficiaries
shall be made on the date the report is deemed to have been sent; and

(4) This section does not preclude an action to recover for fraud or
misrepresentation related to the report. (L. 2001 H.B. 241, A.L. 2004
H.B. 1511)

1. If the provisions of this section apply to a trust, the
unitrust amount shall be determined as follows:

(1) For the first three accounting periods of the trust, the unitrust
amount for a current valuation year of the trust shall be a percentage
between three and five percent that is specified by the terms of the
governing instrument or by the election made in accordance with
subdivision (2) of subsection 5 of this section, of the net fair market
values of the assets held in the trust on the first business day of the
current valuation year;

(2) Beginning with the fourth accounting period of the trust, the
unitrust amount for a current valuation year of the trust shall be a
percentage between three and five percent that is specified by the terms
of the governing instrument or by the election made in accordance with
subdivision (2) of subsection 5 of this section, of the average of the
net fair market values of the assets held in the trust on the first
business day of the current valuation year and the net fair market values
of the assets held in the trust on the first business day of each prior
valuation year, regardless of whether this section applied to the
ascertainment of net income for all valuation years;

(3) The unitrust amount for the current valuation year computed pursuant
to subdivision (1) or (2) of this subsection shall be proportionately
reduced for any distributions, in whole or in part, other than
distributions of the unitrust amount, and for any payments of expenses,
including debts, disbursements and taxes, from the trust within a current
valuation year that the trustee determines to be material and
substantial, and shall be proportionately increased for the receipt,
other than a receipt that represents a return on investment, of any
additional property into the trust within a current valuation year;

(4) For purposes of subdivision (2) of this subsection, the net fair
market values of the assets held in the trust on the first business day
of a prior valuation year shall be adjusted to reflect any reduction, in
the case of a distribution or payment, or increase, in the case of a
receipt, for the prior valuation year pursuant to subdivision (3) of this
subsection, as if the distribution, payment or receipt had occurred on
the first day of the prior valuation year;

(5) In the case of a short accounting period, the trustee shall prorate
the unitrust amount on a daily basis;

(6) In the case where the net fair market value of an asset held in the
trust has been incorrectly determined either in a current valuation year
or in a prior valuation year, the unitrust amount shall be increased in
the case of an undervaluation, or be decreased in the case of an
overvaluation, by an amount equal to the difference between the unitrust
amount determined based on the correct valuation of the asset and the
unitrust amount originally determined.

2. As used in this section, the following terms mean:

(1) "Current valuation year", the accounting period of the trust for
which the unitrust amount is being determined;

(2) "Prior valuation year", each of the two accounting periods of the
trust immediately preceding the current valuation year.

3. In determining the sum of the net fair market values of the assets
held in the trust for purposes of subdivisions (1) and (2) of subsection
1 of this section, there shall not be included the value of:

(1) Any residential property or any tangible personal property that, as
of the first business day of the current valuation year, one or more
income beneficiaries of the trust have or had the right to occupy, or
have or had the right to possess or control, other than in a capacity as
trustee, and instead the right of occupancy or the right to possession or
control shall be deemed to be the unitrust amount with respect to the
residential property or the tangible personal property; or

(2) Any asset specifically given to a beneficiary under the terms of the
trust and the return on investment on that asset, which return on
investment shall be distributable to the beneficiary.

4. In determining the net fair market value of each asset held in the
trust pursuant to subdivisions (1) and (2) of subsection 1 of this
section, the trustee shall, not less often than annually, determine the
fair market value of each asset of the trust that consists primarily of
real property or other property that is not traded on a regular basis in
an active market by appraisal or other reasonable method or estimate, and
that determination, if made reasonably and in good faith, shall be
conclusive as to all persons interested in the trust. Any claim based on
a determination made pursuant to this subsection shall be barred if not
asserted in a judicial proceeding brought by any beneficiary with any
interest whatsoever in the trust within two years after the trustee has
sent a report to all qualified beneficiaries that adequately discloses
the facts constituting the claim. The rules set forth in subsection 2 of
section 469.409 shall apply to the barring of claims pursuant to this
subsection.

5. This section shall apply to the following trusts:

(1) Any trust created after August 28, 2001, with respect to which the
terms of the trust clearly manifest an intent that this section apply;

(2) Any trust created under an instrument that became irrevocable on,
before, or after August 28, 2001, if the trustee, in the trustee's
discretion, elects to have this section apply unless the instrument
creating the trust specifically prohibits an election under this
subdivision. The trustee shall deliver notice to all qualified
beneficiaries and the settlor of the trust, if he or she is then living,
of the trustee's intent to make such an election at least sixty days
before making that election. The trustee shall have sole authority to
make the election. Section 469.402 shall apply for all purposes of this
subdivision. An action or order by any court shall not be required. The
election shall be made by a signed writing delivered to the settlor of
the trust, if he or she is then living, and to all qualified
beneficiaries. The election is irrevocable, unless revoked by order of
the court having jurisdiction of the trust. The election may specify the
percentage used to determine the unitrust amount pursuant to this
section, provided that such percentage is between three and five percent,
or if no percentage is specified, then that percentage shall be three
percent. In making an election pursuant to this subsection, the trustee
shall be subject to the same limitations and conditions as apply to an
adjustment between income and principal pursuant to subsections 3 and 4
of section 469.405;

(3) No action of any kind based on an election made by a trustee pursuant
to subdivision (2) of this subsection shall be brought against the
trustee by any beneficiary of that trust three years from the effective
date of that election;

(4) If this section is made applicable under this subdivision to an
institutional endowment fund, as defined in section 402.010, RSMo, the
restrictions contained in section 402.015, RSMo, shall not apply to the
extent payment of a unitrust amount would otherwise be prohibited. (L.
2001 H.B. 241, A.L. 2002 H.B. 1151 merged with S.B. 742, A.L. 2004 H.B.
1511)

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 of a terminating income interest shall
determine the amount of net income and net principal receipts received
from property specifically given to a beneficiary pursuant to the rules
in sections 469.417 to 469.461 which apply to trustees and the rules in
subdivision (5) of this section. The fiduciary shall distribute the net
income and net principal receipts to the beneficiary who is to receive
the specific property;

(2) A fiduciary shall determine the remaining net income of a decedent's
estate or a terminating income interest pursuant to the rules in sections
469.417 to 469.461 which apply to trustees and by:

(a) Including in net income all income from property used to discharge
liabilities;

(b) Paying from income or principal, in the fiduciary's discretion, fees
of attorneys, accountants and fiduciaries; court costs and other expenses
of administration; and interest on death taxes, but the fiduciary may pay
those expenses from income of property passing to a trust for which the
fiduciary claims an estate tax marital or charitable deduction only to
the extent that the payment of those expenses from income will not cause
the reduction or loss of the deduction; and

(c) Paying from principal all other disbursements made or incurred in
connection with the settlement of a decedent's estate or the winding up
of a terminating income interest, including debts, funeral expenses,
disposition of remains, family allowances, and death taxes and related
penalties that are apportioned to the estate or terminating income
interest by the will, the terms of the trust, or applicable law;

(3) A fiduciary shall distribute to a beneficiary who receives a
pecuniary amount outright the interest or any other amount provided by
the will, the terms of the trust, or in the absence of any such
provisions, the provisions of section 473.633, RSMo, from net income
determined pursuant to subdivision (2) of this section or from principal
to the extent that net income is insufficient. If a beneficiary is to
receive a pecuniary amount outright from a trust after an income interest
ends and no interest or other amount is provided for by the terms of the
trust or applicable law, the fiduciary shall distribute the interest or
other amount to which the beneficiary would be entitled under applicable
law if the pecuniary amount were required to be paid under a will;

(4) A fiduciary shall distribute the net income remaining after
distributions required by subdivision (3) of this section in the manner
described in section 469.415 to all other beneficiaries, including a
beneficiary who receives a pecuniary amount in trust, even if the
beneficiary holds an unqualified power to withdraw assets from the trust
or other presently exercisable general power of appointment over the
trust;

(5) A fiduciary may not reduce principal or income receipts from property
described in subdivision (1) of this section because of a payment
described in sections 469.451 and 469.453 to the extent that the will,
the terms of the trust, or applicable law requires the fiduciary to make
the payment from assets other than the property or to the extent that the
fiduciary recovers or expects to recover the payment from a third party.
The net income and principal receipts from the property are determined by
including all of the amounts the fiduciary receives or pays with respect
to the property, whether those amounts accrued or became due before, on
or after the date of a decedent's death or an income interest's
terminating event, and by making a reasonable provision for amounts that
the fiduciary believes the estate or terminating income interest may
become obligated to pay after the property is distributed. (L. 2001 H.B.
241)

1. Each beneficiary described in subdivision (4) of section
469.413 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 whom this section applies,
each beneficiary, including one who does not receive part of the
distribution, is entitled, as of each distribution date, to the net
income the fiduciary has received after the date of death or terminating
event or earlier distribution date but has not distributed as of the
current distribution date.

2. In determining a beneficiary's share of net income, the following
rules apply:

(1) The beneficiary is entitled to receive a portion of the net income
equal to the beneficiary's fractional interest in the undistributed
principal assets immediately before the distribution date, including
assets that later may be sold to meet principal obligations;

(2) The beneficiary's fractional interest in the undistributed principal
assets shall be calculated without regard to property specifically given
to a beneficiary and property required to pay pecuniary amounts not in
trust;

(3) The beneficiary's fractional interest in the undistributed principal
assets shall be calculated on the basis of the aggregate value of those
assets as of the distribution date without reducing the value by any
unpaid principal obligation;

(4) The distribution date for purposes of this section may be the date as
of which the fiduciary calculates the value of the assets if that date is
reasonably near the date on which assets are actually distributed.

3. If a fiduciary does not distribute all of the collected but
undistributed net income to each person as of a distribution date, the
fiduciary shall maintain appropriate records showing the interest of each
beneficiary in that net income.

4. A fiduciary may apply the rules in this section, to the extent that
the fiduciary considers it appropriate, to net gain or loss realized
after the date of death or terminating event or earlier distribution date
from the disposition of a principal asset if this section applies to the
income from the asset. (L. 2001 H.B. 241)

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 trust:

(1) On the date it is transferred to the trust in the case of an asset
that is transferred to a trust during the transferor's life;

(2) On the date of a testator's death in the case of an asset that
becomes subject to a trust by reason of a will, even if there is an
intervening period of administration of the testator's estate; or

(3) On the date of an individual's death in the case of an asset that is
transferred to a fiduciary by a third party because of the individual's
death.

3. An asset becomes subject to a successive income interest on the day
after the preceding income interest ends, as determined pursuant to
subsection 4 of this section, even if there is an intervening period of
administration to wind up the preceding income interest.

4. An income interest ends on the day before an income beneficiary dies
or another terminating event occurs, or on the last day of a period
during which there is no beneficiary to whom a trustee may distribute
income. (L. 2001 H.B. 241)

1. A trustee shall allocate an income receipt or disbursement
other than one to which subdivision* (1) of section 469.413 applies 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. A trustee shall allocate an income receipt or disbursement to income
if its due date occurs on or after the date on which a decedent dies or
an income interest begins and it is a periodic due date. An income
receipt or disbursement shall be treated as accruing from day to day if
its due date is not periodic or it has no due date. The portion of the
receipt or disbursement accruing before the date on which a decedent dies
or an income interest begins shall be allocated to principal and the
balance shall be allocated to income.

3. An item of income or an obligation is due on the date a payment is
required. If a payment date is not stated, there is no due date for the
purposes of sections 469.401 to 469.467. Distributions to shareholders or
other owners from an entity to which section 469.423 applies are deemed
to be due on the date fixed by the entity for determining who is entitled
to receive the distribution or, if no date is fixed, on the declaration
date for the distribution. A due date is periodic for receipts or
disbursements that shall be paid at regular intervals under a lease or an
obligation to pay interest or if an entity customarily makes
distributions at regular intervals. (L. 2001 H.B. 241, A.L. 2004 H.B.
1511)

*Word "subsection" appears in original rolls.

1. For purposes of this section, the phrase "undistributed
income" means net income received before the date on which an income
interest ends. The phrase 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.

2. When a mandatory income interest ends, the trustee shall pay to a
mandatory income beneficiary who survives that date, or the estate of a
deceased mandatory income beneficiary whose death causes the interest to
end, the beneficiary's share of the undistributed income that is not
disposed of under the terms of the trust unless the beneficiary has an
unqualified power to revoke more than five percent of the trust
immediately before the income interest ends. In the latter case, the
undistributed income from the portion of the trust that may be revoked
shall be added to principal.

3. When a trustee's obligation to pay a fixed annuity or a fixed fraction
of the value of the trust's assets ends, the trustee shall prorate the
final payment if and to the extent required by applicable law to
accomplish a purpose of the trust or its settlor relating to income,
gift, estate or other tax requirements. (L. 2001 H.B. 241)

1. For purposes of this section, the term "entity" means 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 469.425 applies, a business or activity to which
section 469.427 applies, or an asset-backed security to which section
469.449 applies.

2. Except as otherwise provided in this section, a trustee shall allocate
to income money received from an entity.

3. A trustee shall allocate the following receipts from an entity to
principal:

(1) Property other than money;

(2) Money received in one distribution or a series of related
distributions in exchange for part or all of a trust's interest in the
entity;

(3) Money received in total or partial liquidation of the entity; and

(4) Money received from an entity that is a regulated investment company
or a real estate investment trust if the money distributed is a capital
gain dividend for federal income tax purposes.

4. Money is received in partial liquidation:

(1) To the extent that the entity, at or near the time of a distribution,
indicates that such money is a distribution in partial liquidation; or

(2) If the total amount of money and property received in a distribution
or series of related distributions is greater than twenty percent of the
entity's gross assets, as shown by the entity's year-end financial
statements immediately preceding the initial receipt.

5. Money is not received in partial liquidation, nor may it be taken into
account pursuant to subdivision (2) of subsection 4 of this section, to
the extent that such money does not exceed the amount of income tax that
a trustee or beneficiary shall pay on taxable income of the entity that
distributes the money.

6. A trustee may rely upon a statement made by an entity about the source
or character of a distribution if the statement is made at or near the
time of distribution by the entity's board of directors or other person
or group of persons authorized to exercise powers to pay money or
transfer property comparable to those of a corporation's board of
directors. (L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

A trustee shall allocate to income 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, and shall allocate to
principal an amount received as a distribution of principal from such a
trust or estate. If a trustee purchases an interest in a trust that is an
investment entity, or a decedent or donor transfers an interest in such a
trust to a trustee, section 469.423 or 469.449 shall apply to a receipt
from the trust. (L. 2001 H.B. 241)

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 transactions, whether or not
its assets are segregated from other trust assets.

2. A trustee who accounts separately for a business or other activity may
determine the extent to which net cash receipts shall be retained for
working capital, the acquisition or replacement of fixed assets, and
other reasonably foreseeable needs of the business or activity, and the
extent to which the remaining net cash receipts are accounted for as
principal or income in the trust's general accounting records. If a
trustee sells assets of the business or other activity, other than in the
ordinary course of the business or activity, the trustee shall account
for the net amount received as principal in the trust's general
accounting records to the extent the trustee determines that the amount
received is no longer required in the conduct of the business.

3. Activities for which a trustee may maintain separate accounting
records include:

(1) Retail, manufacturing, service and other traditional business
activities;

(2) Farming;

(3) Raising and selling livestock and other animals;

(4) Management of rental properties;

(5) Extraction of minerals and other natural resources;

(6) Timber operations; and

(7) Activities to which section 469.447 applies. (L. 2001 H.B. 241)

A trustee shall allocate to principal:

(1) To the extent not allocated to income pursuant to sections 469.401 to
469.467, assets received from a transferor during the transferor's
lifetime, a decedent's estate, a trust with a terminating income
interest, or a payer under a contract naming the trust or its trustee as
beneficiary;

(2) Money or other property received from the sale, exchange, liquidation
or change in form of a principal asset, including realized profit,
subject to sections 469.423 to 469.467;

(3) Amounts recovered from third parties to reimburse the trust because
of disbursements described in subdivision (7) of subsection 1 of section
469.453 or for other reasons to the extent not based on the loss of
income;

(4) Proceeds of property taken by eminent domain, but a separate award
made for the loss of income with respect to an accounting period during
which a current income beneficiary had a mandatory income interest is
income;

(5) Net income received in an accounting period during which there is no
beneficiary to whom a trustee may or shall distribute income; and

(6) Other receipts as provided in sections 469.435 to 469.449. (L. 2001
H.B. 241)

To the extent that a trustee accounts for receipts from rental
property pursuant to this section, the trustee shall allocate to income
an amount received as rent of real or personal property, including an
amount received for cancellation or renewal of a lease. An amount
received as a refundable deposit, including a security deposit or a
deposit that is to be applied as rent for future periods, shall be added
to principal and held subject to the terms of the lease and is not
available for distribution to a beneficiary until the trustee's
contractual obligations have been satisfied with respect to that amount.
(L. 2001 H.B. 241)

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, shall be allocated to income without any provision for
amortization of premium.

2. A trustee shall allocate to principal an amount received from the
sale, redemption or other disposition of an obligation to pay money to
the trustee more than one year after it is purchased or acquired by the
trustee, including an obligation whose purchase price or value when it is
acquired is less than its value at maturity. If the obligation matures
within one year after it is purchased or acquired by the trustee, an
amount received in excess of its purchase price or its value when
acquired by the trust shall be allocated to income.

3. This section does not apply to an obligation to which section 469.437,
469.439, 469.441, 469.443, 469.447 or 469.449 applies. (L. 2001 H.B. 241)

1. Except as otherwise provided in subsection 2 of this section,
a trustee shall allocate to principal the proceeds of a life insurance
policy or other contract in which the trust or its trustee is named as
beneficiary, including a contract that insures the trust or its trustee
against loss for damage to, destruction of, or loss of title to a trust
asset. The trustee shall allocate dividends on an insurance policy to
income if the premiums on the policy are paid from income, and to
principal if the premiums are paid from principal.

2. A trustee shall allocate to income proceeds of a contract that insures
the trustee against loss of occupancy or other use by an income
beneficiary, loss of income, or, subject to section 469.427, loss of
profits from a business.

3. This section does not apply to a contract to which section 469.437
applies. (L. 2001 H.B. 241)

If a trustee determines that an allocation between principal and
income required by section 469.437, 469.439, 469.441, 469.443 or 469.449
is insubstantial, the trustee may allocate the entire amount to principal
unless one of the circumstances described in subsection 3 of section
469.405 applies to the allocation. This power may be exercised by a
cotrustee in the circumstances described in subsection 4 of section
469.405 and may be released for the reasons and in the manner described
in subsection 5 of section 469.405. An allocation is presumed to be
insubstantial if:

(1) The amount of the allocation would increase or decrease net income in
an accounting period, as determined before the allocation, by less than
ten percent; or

(2) The value of the asset producing the receipt for which the allocation
would be made is less than ten percent of the total value of the trust's
assets at the beginning of the accounting period. (L. 2001 H.B. 241, A.L.
2004 H.B. 1511)

1. As used in this section, the following terms mean:

(1) "Payment", an amount that is:

(a) Received or withdrawn from a plan; or

(b) One of a series of distributions that have been or will be received
over a fixed number of years or during the life of one or more
individuals under any contractual or other arrangement, or is a single
payment from a plan that the trustee could have received over a fixed
number of years or during the life of one or more individuals;

(2) "Plan", a contractual, custodial, trust or other arrangement that
provides for distributions to the trust, including, but not limited to,
qualified retirement plans, Individual Retirement Accounts, Roth
Individual Retirement Accounts, public and private annuities, and
deferred compensation, including payments received directly from an
entity as defined in section 469.423 regardless of whether or not such
distributions are made from a specific fund or account.

2. If any portion of a payment is characterized as a distribution to the
trustee of interest, dividends or a dividend equivalent, the trustee
shall allocate the portion so characterized to income. The trustee shall
allocate the balance of that payment to principal.

3. If no part of a payment is allocated to income pursuant to subsection
2 of this section, then for each accounting period of the trust that any
payment is received by the trust with respect to the trust's interest in
a plan, the trustee shall allocate to income that portion of the
aggregate value of all payments received by the trustee in that
accounting period equal to the amount of plan income attributable to the
trust's interest in the plan for that calendar year. The trustee shall
allocate the balance of that payment to principal.

4. For purposes of this section, if a payment is received from a plan
that maintains a separate account or fund for its participants or account
holders, including, but not limited to, defined contribution retirement
plans, Individual Retirement Accounts, Roth Individual Retirement
Accounts, and some types of deferred compensation plans, the phrase "plan
income" shall mean either the amount of the plan account or fund held for
the benefit of the trust that, if the plan account or fund were a trust,
would be allocated to income pursuant to sections 469.401 to 469.467 for
that accounting period, or four percent of the value of the plan account
or fund on the first day of that accounting period. The method of
determining plan income pursuant to this subsection shall be chosen by
the trustee in the trustee's discretion. The trustees may change the
method of determining plan income pursuant to this subsection for any
future accounting period.

5. For purposes of this section if the payment is received from a plan
that does not maintain a separate account or fund for its participants or
account holders, including by way of example and not limitation defined
benefit retirement plans and some types of deferred compensation plans,
the term "plan income" shall mean four percent of the total present value
of the trust's interest in the plan as of the first day of the accounting
period, based on reasonable actuarial assumptions as determined by the
trustee.

6. If, to obtain an estate or gift tax marital deduction for a trust, a
trustee shall allocate more of a payment to income than provided for by
this section, the trustee shall allocate to income the additional amount
necessary to obtain the marital deduction. (L. 2001 H.B. 241)

1. As used in this section, the phrase "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 phrase
includes a leasehold, patent, copyright, royalty right, and right to
receive payments during a period of more than one year under an
arrangement that does not provide for the payment of interest on the
unpaid balance. The phrase does not include a payment subject to section
469.437, resources subject to section 469.441, timber subject to section
469.443, an activity subject to section 469.447, an asset subject to
section 469.449, or any asset for which the trustee establishes a reserve
for depreciation pursuant to section 469.455.

2. A trustee shall allocate to income ten percent of the receipts from a
liquidating asset and the balance to principal. (L. 2001 H.B. 241)

1. To the extent that a trustee accounts for receipts from an
interest in minerals or other natural resources pursuant to this section,
the trustee shall allocate them as follows:

(1) If received as nominal delay rental or nominal annual rent on a
lease, a receipt shall be allocated to income;

(2) If received from a production payment, a receipt shall be allocated
to income if and to the extent that the agreement creating the production
payment provides a factor for interest or its equivalent. The balance
shall be allocated to principal;

(3) If an amount received as a royalty, shut-in-well payment, take-
or-pay payment, bonus or delay rental is more than nominal, ninety
percent shall be allocated to principal and the balance to income;

(4) If an amount is received from a working interest or any other
interest not provided for in subdivision (1), (2) or (3) of this
subsection, ninety percent of the net amount received shall be allocated
to principal and the balance to income.

2. An amount received on account of an interest in water that is
renewable shall be allocated to income. If the water is not renewable,
ninety percent of the amount shall be allocated to principal and the
balance to income.

3. Sections 469.401 to 469.467 apply whether or not a decedent or donor
was extracting minerals, water or other natural resources before the
interest became subject to the trust.

4. If a trust owns an interest in minerals, water or other natural
resources on August 28, 2001, the trustee may allocate receipts from the
interest as provided in sections 469.401 to 469.467 or in the manner used
by the trustee before August 28, 2001. If the trust acquires an interest
in minerals, water or other natural resources after August 28, 2001, the
trustee shall allocate receipts from the interest as provided in sections
469.401 to 469.467. (L. 2001 H.B. 241)

1. To the extent that a trustee accounts for receipts from the
sale of timber and related products pursuant to this section, the trustee
shall allocate the net receipts:

(1) To income to the extent that the amount of timber removed from the
land does not exceed the rate of growth of the timber during the
accounting periods in which a beneficiary has a mandatory income interest;

(2) To principal to the extent that the amount of timber removed from the
land exceeds the rate of growth of the timber or the net receipts are
from the sale of standing timber;

(3) To or between income and principal if the net receipts are from the
lease of timberland or from a contract to cut timber from land owned by a
trust, by determining the amount of timber removed from the land under
the lease or contract and applying the rules in subdivisions (1) and (2)
of this subsection; or

(4) To principal to the extent that advance payments, bonuses and other
payments are not allocated pursuant to either subdivision (1), (2) or (3)
of this subsection.

2. In determining net receipts to be allocated pursuant to subsection 1
of this section, a trustee shall deduct and transfer to principal a
reasonable amount for depletion.

3. Sections 469.401 to 469.467 apply whether or not a decedent or
transferor was harvesting timber from the property before it became
subject to the trust.

4. If a trust owns an interest in timberland on August 28, 2001, the
trustee may allocate net receipts from the sale of timber and related
products as provided in sections 469.401 to 469.467 or in the manner used
by the trustee before August 28, 2001. If the trust acquires an interest
in timberland after August 28, 2001, the trustee shall allocate net
receipts from the sale of timber and related products as provided in
sections 469.401 to 469.467. (L. 2001 H.B. 241)

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
spouse with sufficient income from or use of the trust assets, and if the
amounts that the trustee transfers from principal to income pursuant to
section 469.405 and distributes to the spouse from principal pursuant to
the terms of the trust are insufficient to provide the spouse with the
beneficial enjoyment required to obtain the marital deduction, the spouse
may require the trustee to make property productive of income, convert
property within a reasonable time, or exercise the power conferred by
subsection 1 of section 469.405. The trustee may decide which action or
combination of actions to take.

2. In cases not governed by subsection 1 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. (L.
2001 H.B. 241)

1. As used in this section, the term "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.

2. To the extent that a trustee does not account pursuant to section
469.427 for transactions in derivatives, the trustee shall allocate to
principal receipts from and disbursements made in connection with those
transactions.

3. 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. (L. 2001 H.B. 241)

1. As used in this section, the phrase "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 phrase 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 phrase does not include an asset to which section
469.423 or 469.437 applies.

2. 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 payer
identifies as being from interest or other current return and shall
allocate the balance of the payment to principal.

3. If a trust receives one or more payments in exchange for the trust's
entire interest in an asset-backed security in one accounting period, the
trustee shall allocate the payments to principal. If a payment is one of
a series of payments that will result in the liquidation of the trust's
interest in the security over more than one accounting period, the
trustee shall allocate ten percent of the payment to income and the
balance to principal. (L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

A trustee shall make the following disbursements from income to
the extent that they are not disbursements to which paragraph (b) or (c)
of subdivision (2) of section 469.413 applies:

(1) One-half of the regular compensation of the trustee and of any person
providing investment advisory or custodial services to the trustee;

(2) One-half of all expenses for accountings, judicial proceedings, or
other matters that involve both the income and remainder interests;

(3) All of the other ordinary expenses incurred in connection with the
administration, management or preservation of trust property and the
distribution of income, including interest, ordinary repairs, regularly
recurring taxes assessed against principal, and expenses of a proceeding
or other matter that concerns primarily the income interest; and

(4) Recurring premiums on insurance covering the loss of a principal
asset or the loss of income from or use of the asset. (L. 2001 H.B. 241)

1. A trustee shall make the following disbursements from
principal:

(1) The remaining one-half of the disbursements described in subdivisions
(1) and (2) of section 469.451;

(2) All of the trustee's compensation calculated on principal as a fee
for acceptance, distribution or termination, and disbursements made to
prepare property for sale;

(3) Payments on the principal of a trust debt;

(4) Expenses of a proceeding or other matter that concerns primarily an
interest in principal;

(5) Premiums paid on a policy of insurance not described in subdivision
(4) of section 469.451 of which the trust is the owner and beneficiary;

(6) Estate, inheritance and other transfer taxes, including penalties,
apportioned to the trust; and

(7) Extraordinary expenses incurred in connection with the management and
preservation of trust property;

(8) Expenses for a capital improvement to a principal asset, whether in
the form of changes to an existing asset or the construction of a new
asset, including special assessments; and

(9) Disbursements related to environmental matters, including
reclamation, assessing environmental conditions, remedying and removing
environmental contamination, monitoring remedial activities and the
release of substances, preventing future releases of substances,
collecting amounts from persons liable or potentially liable for the
costs of those activities, penalties imposed under environmental laws or
regulations and other payments made to comply with those laws or
regulations, statutory or common law claims by third parties, and
defending claims based on environmental matters.

2. If a principal asset is encumbered with an obligation that requires
income from that asset to be paid directly to the creditor, the trustee
shall transfer from principal to income an amount equal to the income
paid to the creditor in reduction of the principal balance of the
obligation. (L. 2001 H.B. 241, A.L. 2004 H.B. 1511)

1. As used in this section, the term "depreciation" means a
reduction in value due to wear, tear, decay, corrosion or gradual
obsolescence of a fixed asset having a useful life of more than one year.

2. A trustee may transfer to principal a reasonable amount of the net
cash receipts from a principal asset that is subject to depreciation, but
may not transfer any amount for depreciation:

(1) Of that portion of real property used or available for use by a
beneficiary as a residence or of tangible personal property held or made
available for the personal use or enjoyment of a beneficiary;

(2) During the administration of a decedent's estate; or

(3) Pursuant to this section if the trustee is accounting pursuant to
section 469.427 for the business or activity in which the asset is used.

3. An amount transferred to principal need not be held as a separate
fund. (L. 2001 H.B. 241)

1. If a trustee makes or expects to make a principal
disbursement described in this section, the trustee may transfer an
appropriate amount from income to principal in one or more accounting
periods to reimburse principal or to provide a reserve for future
principal disbursements.

2. Principal disbursements to which subsection 1 of this section applies
include the following, but only to the extent that the trustee has not
been and does not expect to be reimbursed by a third party:

(1) An amount chargeable to income but paid from principal because it is
unusually large, including extraordinary repairs;

(2) Disbursements made to prepare property for rental, including tenant
allowances, leasehold improvements, and broker's commissions;

(3) Periodic payments on an obligation secured by a principal asset to
the extent that the amount transferred from income to principal for
depreciation is less than the periodic payments; and

(4) Disbursements described in subdivision (7) of subsection 1 of section
469.453.

3. If the asset whose ownership gives rise to the disbursements becomes
subject to a successive income interest after an income interest ends, a
trustee may continue to transfer amounts from income to principal as
provided in subsection 1 of this section. (L. 2001 H.B. 241)

1. A tax required to be paid by a trustee based on receipts
allocated to income shall be paid from income.

2. A tax required to be paid by a trustee based on receipts allocated to
principal shall be paid from principal, even if the tax is called an
income tax by the taxing authority.

3. A tax required to be paid by a trustee on the trust's share of an
entity's taxable income shall be paid proportionately:

(1) From income to the extent that receipts from the entity are allocated
to income; and

(2) From principal to the extent that:

(a) Receipts from the entity are allocated to principal; and

(b) The trust's share of the entity's taxable income exceeds the total
receipts described in subdivision (1) of this subsection and paragraph
(a) of this subdivision.

4. For purposes of this section, receipts allocated to principal or
income shall be reduced by the amount distributed to a beneficiary from
principal or income for which the trust receives a deduction in
calculating the tax. (L. 2001 H.B. 241)

1. A fiduciary may make adjustments between principal and income
to offset the shifting of economic interests or tax benefits between
income beneficiaries and remainder beneficiaries which arise from:

(1) Elections and decisions, other than those described in subsection 2
of this section, that the fiduciary makes from time to time regarding tax
matters;

(2) An income tax or any other tax that is imposed upon the fiduciary or
a beneficiary as a result of a transaction involving or a distribution
from the estate or trust; or

(3) The ownership by an estate or trust of an interest in an entity whose
taxable income, whether or not distributed, is includable in the taxable
income of the estate, trust or a beneficiary.

2. If the amount of an estate tax marital deduction or charitable
contribution deduction is reduced because a fiduciary deducts an amount
paid from principal for income tax purposes instead of deducting it for
estate tax purposes, and as a result estate taxes paid from principal are
increased and income taxes paid by an estate, trust or beneficiary are
decreased, each estate, trust or beneficiary that benefits from the
decrease in income tax shall reimburse the principal from which the
increase in estate tax is paid. The total reimbursement shall equal the
increase in the estate tax to the extent that the principal used to pay
the increase would have qualified for a marital deduction or charitable
contribution deduction but for the payment. The proportionate share of
the reimbursement for each estate, trust or beneficiary whose income
taxes are reduced shall be the same as its proportionate share of the
total decrease in income tax. An estate or trust shall reimburse
principal from income. (L. 2001 H.B. 241)

In applying and construing sections 469.401 to 469.467,
consideration shall be given to the need to promote uniformity of the law
with respect to its subject matter among states that enact it. (L. 2001
H.B. 241)

If any provision of sections 469.401 to 469.467 or the
application of these sections to any person or circumstance is held
invalid, the invalidity does not affect other provisions or applications
of sections 469.401 to 469.467 which can be given effect without the
invalid provision or application. (L. 2001 H.B. 241)

Sections 469.401 to 469.467 apply to every trust or decedent's
estate existing on August 28, 2001, except as otherwise expressly
provided in the will or terms of the trust or in sections 469.401 to
469.467.

(L. 2001 H.B. 241)

Sections 469.900 to 469.913 shall be known, and may be cited, as
the "Missouri Prudent Investor Act". As used in this act, the term
"trustee" includes independent personal representatives and trustees,
whether of express or implied trusts, and the term "trust" includes
independently administered estates. (L. 1996 H.B. 1432, A.L. 2004 H.B.
1511)

*Transferred 2004; formerly 456.900

1. Except as otherwise provided in subsection 2 of this section,
or by other applicable laws, a trustee who invests and manages trust
assets owes a duty to the beneficiaries of the trust to comply with the
prudent investor rule set forth in this act**.

2. A settlor may expand or restrict the prudent investor rule detailed in
this act** by express provisions in the trust instrument. A trustee is
not liable to a beneficiary for the trustee's good faith reliance on
these express provisions. (L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.901

**"This act" (H.B. 1432, 1996) contained numerous sections. Consult
Disposition of Sections Table for a definitive listing.

1. A trustee shall invest and manage trust assets as a prudent
investor would, by considering the purposes, terms, distribution
requirements, and other circumstances of the trust. In satisfying this
standard, the trustee shall exercise reasonable care, skill, and caution.

2. A trustee's investment and management decisions respecting individual
assets and courses of action must be evaluated not in isolation but in
the context of the trust portfolio as a whole and as a part of an overall
investment strategy having risk and return objectives reasonably suited
to the trust.

3. When investing and managing trust assets, a trustee shall consider the
following as are relevant to the trust or its beneficiaries:

(1) General economic conditions;

(2) The possible effect of inflation or deflation;

(3) The expected tax consequences of investment decisions or strategies;

(4) The role that each investment or course of action plays within the
overall trust portfolio;

(5) The expected total return from income and the appreciation of capital;

(6) Other resources of the beneficiaries known to the trustee;

(7) Needs for liquidity, regularity of income, and preservation or
appreciation of capital;

(8) An asset's special relationship or special value, if any, to the
purposes of the trust or to one or more of the beneficiaries; and

(9) The size of the portfolio, nature and estimated duration of the
fiduciary relationship and distribution requirements under the governing
instrument.

4. A trustee shall make a reasonable effort to ascertain facts relevant
to the investment and management of trust assets.

5. A trustee may invest in any kind of property or type of investment
consistent with the standards of this act**.

6. A trustee who has special skills or expertise, or is named trustee in
reliance upon the trustee's representation that the trustee has special
skills or expertise, has a duty to use those special skills or expertise
when investing and managing trust assets. (L. 1996 H.B. 1432, A.L. 2004
H.B. 1511)

*Transferred 2004; formerly 456.902

**"This act" (H.B. 1432, 1996) contained numerous sections. Consult
Disposition of Sections Table for a definitive listing.

A trustee shall diversify the investments of the trust unless
the trustee reasonably determines that, because of special circumstances,
the purposes of the trust are better served without diversifying. (L.
1996 H.B. 1432, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.903

Within a reasonable time after accepting a trusteeship or
receiving trust assets, a trustee shall review the trust assets and make
and implement decisions concerning the retention and disposition of
assets in order to bring the trust portfolio into compliance with the
purposes, terms, distribution requirements, and other circumstances of
the trust, and with the requirements of this act**. (L. 1996 H.B. 1432,
A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.904

**"This act" (H.B. 1432, 1996) contained numerous sections. Consult
Disposition of Sections Table for a definitive listing.

A trustee shall invest and manage the trust assets solely in the
interest of the beneficiaries. (L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.905

If a trust has two or more beneficiaries, the trustee shall act
impartially in investing and managing the trust assets, taking into
account any differing interests of the beneficiaries. (L. 1996 H.B. 1432,
A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.906

In investing and managing trust assets, a trustee may only incur
costs that are appropriate and reasonable in relation to the assets, the
purposes of the trust, and the skills of the trustee. (L. 1996 H.B. 1432,
A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.907

The prudent investor rule imposes a standard of conduct, but
does not contemplate a specific outcome or performance. Compliance with
the prudent investor rule is determined in light of the facts and
circumstances existing at the time of a trustee's decision or action and
not by hindsight. (L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.908

1. A trustee may delegate investment and management functions
that a prudent trustee of comparable skills could properly delegate under
the circumstances. The trustee shall exercise reasonable care, skill, and
caution in:

(1) Selecting an agent suitable to the exercise of the delegated
function, taking into account the nature and the value of the assets
subject to such delegation and the expertise of the agent;

(2) Establishing the scope and terms of the delegation, consistent with
the purposes and terms of the trust; and

(3) Periodically reviewing the agent's actions in order to monitor the
agent's performance and compliance with the terms of the delegation.

2. In performing a delegated function, an agent owes a duty to the trust
to exercise reasonable care to comply with the terms of the delegation.

3. A trustee who complies with the requirements of subsection 1 of this
section is not liable to the beneficiaries or to the trust for the
decisions or actions of the agent to whom the function was delegated.

4. By accepting the delegation of a trust function from the trustee of a
trust that is subject to the law of this state, an agent submits to the
jurisdiction of the courts of this state even if the delegation agreement
provides otherwise. (L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.909

The following terms or comparable language in the provisions of
a trust, unless otherwise limited or modified, authorize any investment
or strategy permitted under this act**: "investments permissible by law
for investment of trust funds", "legal investments", "authorized
investments", "using the judgment and care under the circumstances then
prevailing that persons of prudence, discretion, and intelligence
exercise in the management of their own affairs, not in regard to
speculation but in regard to the permanent disposition of their funds,
considering the probable income as well as the probable safety of their
capital", "prudent man rule", "prudent trustee rule", "prudent person
rule", and "prudent investor rule". (L. 1996 H.B. 1432, A.L. 2004 H.B.
1511)

*Transferred 2004; formerly 456.910

**"This act" (H.B. 1432, 1996) contained numerous sections. Consult
Disposition of Sections Table for a definitive listing.

Except as otherwise specifically provided in the terms of the
trust or in sections 456.035 to 456.041, RSMo, and sections 469.900 to
469.913, the provisions of sections 456.035 to 456.041, RSMo, and
sections 469.900 to 469.913 shall apply to any trust established before
or after August 28, 2004, and to any trust asset acquired by the trustee
before or after August 28, 2004. (L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.911

This act** shall be applied and construed to effectuate its
general purpose to make uniform the law with respect to the subject of
this act** among the states enacting it. (L. 1996 H.B. 1432, A.L. 2004
H.B. 1511)

*Transferred 2004; formerly 456.912

**"This act" (H.B. 1432, 1996) contained numerous sections. Consult
Disposition of Sections Table for a definitive listing.

The general assembly recognizes that persons, corporations,
entities or state agencies who have responsibility for investing funds
may be subject to a standard that is specifically set forth in other
statutes. Under such circumstances, such persons, corporations, entities
or state agencies shall comply with the standard of investment set forth
in the other statute, and this act** shall not modify or repeal that
standard. (L. 1996 H.B. 1432, A.L. 2004 H.B. 1511)

*Transferred 2004; formerly 456.913

**"This act" (H.B. 1432, 1996) contained numerous sections. Consult
Disposition of Sections Table for a definitive listing.

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