Oregon Statutes 129.355 – UPIA 409. Deferred compensation, annuities and similar payments
(1) In this section, the following terms have the following meanings:
Terms Used In Oregon Statutes 129.355
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- 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.
- Grantor: The person who establishes a trust and places property into it.
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Marital deduction: The deduction(s) that can be taken in the determination of gift and estate tax liabilities because of the existence of a marriage or marital relationship.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes individuals, corporations, associations, firms, partnerships, limited liability companies and joint stock companies. See Oregon Statutes 174.100
- Trustee: A person or institution holding and administering property in trust.
(a) ‘Payment’ means a payment that a trustee may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payer in exchange for future payments. The term includes a payment made in money or property from the payer’s general assets or from a separate fund created by the payer. For purposes of subsections (4), (5), (6) and (7) of this section, the term also includes any payment from any separate fund, regardless of the reason for the payment.
(b) ‘Separate fund’ includes a private or commercial annuity, an individual retirement account and a pension, profit-sharing, stock-bonus or stock-ownership plan.
(2) Except as provided in subsection (8) of this section, to the extent that a payment is characterized as interest, a dividend or a payment made in lieu of interest or a dividend, a trustee shall allocate that portion of the payment to income. The trustee shall allocate to principal the balance of the payment and any other payment received in the same accounting period that is not characterized as interest, a dividend or an equivalent payment.
(3) Except as provided in subsection (8) of this section, if no part of a payment is characterized as interest, a dividend or an equivalent payment, and all or part of the payment is required to be made, a trustee shall allocate to income 10 percent of the part that is required to be made during the accounting period and the balance to principal. If no part of a payment is required to be made or the payment received is the entire amount to which the trustee is entitled, the trustee shall allocate the entire payment to principal. For purposes of this subsection, a payment is not required to be made to the extent that it is made because the trustee exercises a right of withdrawal.
(4) Except as provided in subsection (5) of this section, subsections (6) and (7) of this section apply, and subsections (2) and (3) of this section do not apply, in determining the allocation of a payment made from a separate fund to either of the following:
(a) A trust for which an election has been made to qualify for a marital deduction under 26 U.S.C. § 2056(b)(7), as in effect on June 9, 2011; or
(b) A trust that qualifies for the marital deduction under 26 U.S.C. § 2056(b)(5), as in effect on June 9, 2011.
(5) Subsections (4), (6) and (7) of this section do not apply in determining the allocation of a series of payments made from a separate fund if and to the extent that the series of payments would, without the application of subsection (4) of this section, qualify for the marital deduction under 26 U.S.C. § 2056(b)(7)(C), as in effect on June 9, 2011.
(6) Except as provided in subsection (7) of this section, a trustee shall determine the internal income of each separate fund for the accounting period as if the separate fund were a trust subject to this chapter. Upon request of the surviving spouse, the trustee shall demand that the person administering the separate fund distribute the internal income to the trust. The trustee shall allocate a payment from the separate fund to income to the extent of the internal income of the separate fund and distribute that amount to the surviving spouse. The trustee shall allocate the balance of the payment to principal. Upon request of the surviving spouse, the trustee shall allocate principal to income to the extent the internal income of the separate fund exceeds payments made from the separate fund to the trust during the accounting period.
(7) If a trustee cannot determine the internal income of a separate fund but can determine the value of the separate fund, the internal income of the separate fund is deemed to equal four percent of the fund’s value, according to the most recent statement of value preceding the beginning of the accounting period. If the trustee can determine neither the internal income of the separate fund nor the fund’s value, the internal income of the fund is deemed to equal the product of the interest rate and the present value of the expected future payments, as determined under 26 U.S.C. § 7520, as in effect on June 9, 2011, for the month preceding the accounting period for which the computation is made.
(8)(a) An increase in value of the following obligations over the value of the obligations at the time of acquisition by the trust is distributable as income:
(A) A zero coupon security.
(B) A deferred annuity contract surrendered wholly or partially before annuitization.
(C) A life insurance contract surrendered wholly or partially before the death of the insured.
(D) Any other obligation for the payment of money that is payable at a future time in accordance with a fixed, variable or discretionary schedule of appreciation in excess of the price at which it was issued.
(b) For purposes of this subsection, the increase in value of an obligation is available for distribution only when the trustee receives cash on account of the obligation. If the obligation is surrendered or partially liquidated, the cash available must be attributed first to the increase. The increase is distributable to the income beneficiary who is the beneficiary at the time the cash is received.
(9) This section does not apply to a payment to which ORS § 129.360 applies. [2003 c.279 § 18; 2011 c.307 § 1]
Section 2, chapter 307, Oregon Laws 2011, provides:
(1) Except as provided in subsection (2) of this section, the amendments to ORS § 129.355 by section 1 of this 2011 Act apply to the determination of the allocation of payments from separate funds made on or after January 1, 2011.
(2) The amendments to ORS § 129.355 by section 1 of this 2011 Act apply to the determination of the allocation of payments from separate funds made on or after the death of the grantor if:
(a) The trust established by the grantor is not funded on or before January 1, 2011; or
(b) The trust established by the grantor is first funded in calendar year 2011. [2011 c.307 § 2]