22-3-414. Receipts normally apportioned — Derivative or option.
(1)
In this section:
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Terms Used In Utah Code 22-3-414
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Contract: A legal written agreement that becomes binding when signed.
Dependent: A person dependent for support upon another.
Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(a)
“Derivative” means a contract, instrument, other arrangement, or combination of contracts, instruments, or other arrangements, for which the value, rights, and obligations are, in whole or in part, dependent on or derived from an underlying tangible or intangible asset, group of tangible or intangible assets, index, or occurrence of an event.
(b)
“Derivative” includes stocks, fixed income securities, and financial instruments and arrangements based on indices, commodities, interest rates, weather-related events, and credit-default events.
(2)
To the extent that a fiduciary does not account for a transaction in derivatives as a business under Section 22-3-403, the fiduciary shall allocate:
(a)
10% of receipts from the transaction and 10% of disbursements made in connection with the transaction to income; and
(b)
the balance to principal.
(3)
Subsection (4) applies if:
(a)
a fiduciary:
(i)
grants an option to buy property from a trust, regardless of whether the trust owns the property when the option is granted;
(ii)
grants an option that permits another person to sell property to the trust; or
(iii)
acquires an option to buy property for the trust or an option to sell an asset owned by the trust; and
(b)
the fiduciary or other owner of the asset is required to deliver the asset if the option is exercised.
(4)
If this subsection applies, the fiduciary shall allocate 10% to income and the balance to principal of the following amounts:
(a)
an amount received for granting the option;
(b)
an amount paid to acquire the option; and
(c)
gain or loss realized on the exercise, exchange, settlement, offset, closing, or expiration of the option.
