S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9765
 
                           I N  A S S E M B L Y
 
                             February 6, 2018
                                ___________
 
 Introduced  by  M.  of A. DINOWITZ -- (at request of the Office of Court
   Administration) -- read once and referred to the Committee on  Judici-
   ary
 
 AN ACT to amend the estates, powers and trusts law, in relation to trust
   accounting income and principal
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1.  Clause (A) of subparagraph 5 of paragraph (b)  of  section
 11-2.3  of the estates, powers and trusts law, as amended by chapter 408
 of the laws of 2008, is amended to read as follows:
   (A) Where the rules in article 11-A apply to a trust and the terms  of
 the trust describe the amount that may or must be distributed to a bene-
 ficiary  by referring to the trust's income, the prudent investor stand-
 ard also authorizes the trustee to adjust between principal  and  income
 to  the  extent the trustee considers advisable to enable the trustee to
 make appropriate present and future  distributions  in  accordance  with
 clause  (b)(3)(A)  if the trustee determines, in light of its investment
 decisions, the consideration factors incorporated in  clause  (b)(5)(B),
 and  the accounting income expected to be produced by applying the rules
 in article 11-A, that such an adjustment would be fair and reasonable to
 all of the beneficiaries.  IN ADJUSTING FROM INCOME TO  PRINCIPAL  UNDER
 THE  POWER CONFERRED BY THIS CLAUSE, THE TRUSTEE MAY ALLOCATE TO PRINCI-
 PAL ANY FORM OF RECEIPT WHICH WOULD OTHERWISE BE CHARACTERIZED AS INCOME
 AND MAY SPECIFY THE PARTICULAR RECEIPT OR RECEIPTS  BEING  ALLOCATED  TO
 PRINCIPAL.  IN  ADJUSTING  FROM  PRINCIPAL TO INCOME THE TRUSTEE (I) MAY
 ALLOCATE TO INCOME ANY ASSET WHICH WOULD OTHERWISE BE  CHARACTERIZED  AS
 PRINCIPAL,  REGARDLESS  OF WHETHER IT CONSTITUTES ORIGINAL TRUST PRINCI-
 PAL, ACCUMULATED INCOME, OR REALIZED OR  UNREALIZED  APPRECIATION,  (II)
 MAY  SPECIFY  THE  PARTICULAR ASSET OR ASSETS BEING ALLOCATED TO INCOME,
 AND (III) MAY SPECIFY THAT WHAT IS BEING ALLOCATED TO INCOME IS PART  OR
 ALL OF THE REALIZED GAIN FROM THE SALE, EXCHANGE OR OTHER DISPOSITION OF
 PARTICULAR PRINCIPAL ASSETS.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD09597-03-8
              

 A. 9765                             2
 
   § 2. Paragraph 2 of section 11-A-4.4 of the estates, powers and trusts
 law,  as added by chapter 243 of the laws of 2001, is amended to read as
 follows:
   (2)  money  or other property received from the sale, exchange, liqui-
 dation, or change in form  of  a  principal  asset,  including  realized
 profit, subject to this part; PROVIDED, HOWEVER, THAT A TRUSTEE MAY VARY
 THIS  ALLOCATION  AS  PROVIDED  IN  CLAUSE 11-2.3(B)(5)(A), AND PROVIDED
 FURTHER, THAT A TRUSTEE WHO HAS  AN  UNLIMITED  DISCRETIONARY  POWER  TO
 DISTRIBUTE PRINCIPAL, AS DEFINED IN SUBPARAGRAPH 10-6.6(S)(9), MAY ALLO-
 CATE  TO INCOME PART OR ALL OF THE REALIZED GAIN FROM THE SALE, EXCHANGE
 OR OTHER DISPOSITION OF SPECIFIED PRINCIPAL ASSETS.
   § 3. This act shall take effect immediately and  shall  apply  to  all
 trusts, whenever established.