(a) Except as otherwise provided in subsection (b), a fiduciary shall allocate to principal the proceeds of a life insurance policy or other contract in which the trust or its fiduciary is named as beneficiary, including a contract that insures the trust or its fiduciary against loss for damage to, destruction of, or loss of title to a trust asset. The fiduciary 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.
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Terms Used In Alabama Code 19-3A-407

  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • Contract: A legal written agreement that becomes binding when signed.
  • Fiduciary: A trustee, executor, or administrator.
(b) A fiduciary shall allocate to income proceeds of a contract that insures the fiduciary against loss of occupancy or other use by an income beneficiary, loss of income, or, subject to Section 19-3A-403, loss of profits from a business.
(c) This section does not apply to a contract to which Section 19-3A-409 applies.
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