Iowa Code 637.420 – Insubstantial allocations not required
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1. If a trustee determines that an allocation between principal and income required by sections 637.421 through 637.424 or section 637.427 is insubstantial, the trustee may allocate the entire receipt to principal.
Terms Used In Iowa Code 637.420
- Accounting period: means a calendar year, unless another twelve-month period is selected by a fiduciary. See Iowa Code 637.102
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Income: means money or property a fiduciary receives as the current return from a principal asset. See Iowa Code 637.102
- Net income: means the total receipts allocated to income during an accounting period minus the disbursements made from income during the period. See Iowa Code 637.102
- Principal: means property held in trust for distribution to a remainder beneficiary when the trust terminates. See Iowa Code 637.102
- Trustee: A person or institution holding and administering property in trust.
- Trustee: includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court. See Iowa Code 637.102
2. An allocation is presumed to be insubstantial if either of the following would be true if an allocation was made:
a. The amount of the allocation would increase or decrease an accounting period‘s net income, as determined before the allocation, by less than ten percent.
b. 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.