Iowa Code 637.427 – Asset-backed securities
Current as of: 2023 | Check for updates
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1. For purposes of 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. The term includes an asset that gives the owner the right to receive only the interest or other current return from the collateral financial assets or only the proceeds from the capital investment in the collateral financial assets. It does not include an asset to which section 637.401 or 637.421 applies.
Terms Used In Iowa Code 637.427
- 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.
- Collateral: means an individual who is related to another individual under the law of intestate succession of this state but who is not the other individual's ascendant or descendant. See Iowa Code 651.1
- Income: means money or property a fiduciary receives as the current return from a principal asset. 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
- security: includes , but is not limited to, a certificated security, an uncertificated security, and a security account. See Iowa Code 633D.2
- 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. If a trust receives a payment from the interest or other current return and the capital investment of the collateral financial assets, the trustee shall allocate to income the portion of a payment that the payor identifies as being from the 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.