Trusts and Estates

Ca. Trs. & Estates Quarterly Volume 8, Issue 2, Summer 2002

THE TAX ASPECTS OF THE NEW UNIFORM PRINCIPAL AND INCOME ACT

by James L. Deeringer, Esq.*

[Editor’s Note: The author is a former member of the Trusts and Estates Section Executive Committee, and he wrote previously on this subject in the Fall 1999 issue of the Quarterly. This article was originally published in The University of Southern California 54th Institute on Federal Taxation – Major Tax Planning for 2002. The article was written approximately 15 months ago, but the author believes that it remains accurate, and the editors believe it to remain useful for practitioners.]

California enacted a new Uniform Principal and Income Act in July, 1999 (referred to hereinafter as "UPAIA" or "the Act").1 The Act became effective on January 1, 2000 as to all trusts and estates, regardless of the date of execution of the governing instrument or the date of death of the decedent. The Act is found in California Probate Code §§ 16320-16375.2 It completely replaces California’s previous Revised Uniform Principal and Income Act.3

The Act is based upon the Uniform Principal and Income Act (referred to hereinafter as "the Uniform Act") promulgated by the National Conference of Commissioners on Uniform State Laws (NCCUSL) in 1997.4 At last count, the Uniform Act has been passed in some form in 13 states. Legislation is currently pending in New York, Pennsylvania and Delaware, as well as other states. California is the first "major" state to adopt the Uniform Act. [Editor’s note: The Uniform Act has now been adopted in approximately 25 states, including New York, Delaware, and Florida, and at the time this issue went to print, a bill containing a version of the UPAIA was awaiting the governor’s signature in Pennsylvania.]

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