§ 11-2.4 Optional unitrust provision

(a) Unless the terms of the trust provide otherwise, the net income of
any trust to which this section applies shall mean the unitrust amount
as determined hereunder.

(b) Unitrust amount.

(1) For the first year of the trust as a unitrust, including a short
year if applicable, the "unitrust amount" for the year shall mean an
amount equal to four percent of the net fair market values of the assets
held in the trust at the beginning of the first business day of the
current valuation year.

(2) For the second year of a trust as a unitrust, including a first
short year if applicable, the "unitrust amount" for the year shall mean
an amount equal to four percent multiplied by a fraction, the numerator
of which shall be the sum of (A) the net fair market values of the
assets held in the trust at the beginning of the first business day of
the current valuation year and (B) the net fair market values of the
assets held in the trust at the beginning of the first business day of
the prior valuation year, and the denominator of which shall be two.

(3) Commencing with the third year of a trust as a unitrust, including
a first short year if applicable, the "unitrust amount" for a current
valuation year of the trust shall mean an amount equal to four percent
multiplied by a fraction, the numerator of which shall be the sum of (A)
the net fair market values of the assets held in the trust at the
beginning of the first business day of the current valuation year and
(B) the net fair market values of the assets held in the trust at the
beginning of the first business day of each prior valuation year, and
the denominator of which shall be three.

(4) The unitrust amount for the current valuation year as computed in
accordance with subparagraph (b)(1), (2) or (3), as adjusted in
accordance with this subparagraph, shall be proportionately reduced for
any corpus distributions to beneficiaries mandated by the terms of the
trust, in whole or in part (other than distributions of the unitrust
amount), and shall be proportionately increased for the receipt, other
than a receipt that represents a return on investment, of any additional
corpus into the trust within a current valuation year.

(5) For purposes of clause (b)(2)(B), the net fair market values of
the assets held in the trust at the beginning of the first business day
of a prior valuation year shall be adjusted to reflect any distributions
to beneficiaries mandated by the terms of the trust, in whole or in part
(other than distributions of the unitrust amount), or receipts (other
than receipts that represent a return on investment) of any additional
principal into the trust, which have occurred after the first day of
such prior valuation year and by the close of the first day of the
current valuation year, as if the distribution or receipt had occurred
on the first day of such prior valuation year.

(6) In the case of a short year, the trustee shall prorate the
unitrust amount on a daily basis. The trustee shall prorate any
adjustment under subparagraph (b)(4) on a daily basis.

(7) In the case where the unitrust amount has been incorrectly
determined either in a current valuation year or in a prior valuation
year, then within a reasonable time (not to exceed eighteen months)
after the error was made, the trustee shall make any non-material
adjustments and pay to the underpaid beneficiary (in case of
non-material underpayment) or shall recover from the overpaid
beneficiary (in case of non-material overpayment) an amount equal to the
difference between the unitrust amount properly payable and any amount
actually paid for any completed valuation year of the trust and shall
properly adjust the unitrust amount for the current valuation year if
affected non-materially by prior incorrect determination of a unitrust
amount. A material correction shall require approval of the surrogate if
applied for by the trustee or an interested party.

(c) Other definitions and special rules. For purposes of this section:

(1) A "current beneficiary" is a person to whom the income (within the
meaning of this section or otherwise) of the trust is payable, or in the
discretion of the trustee may be paid, in whole or in part, during the
current valuation year.

(2) The term "current valuation year" shall mean the year of the trust
for which the unitrust amount is being determined.

(3) The term "prior valuation year" shall mean each of the two years
of the trust immediately preceding the current valuation year.

(4) The term "year" means a calendar year. A "short year" constitutes
a portion of a calendar year that begins when the interest of the
current beneficiary or class of current beneficiaries begins or ends
when the interest of the current beneficiary or class of current
beneficiaries ends.

(5) "Net fair market value" shall mean the fair market value of each
asset comprising the trust reduced by the fair market value of any
outstanding interest-bearing obligations of the trust, whether allocable
to a specific asset or otherwise. Fair market value of an asset may be
determined by any appropriate technique adopted and consistently applied
by the trustee, and such techniques may include, but are not limited to,
use of the asset's value at the close of business on the previous
business day, and notwithstanding that such day may be in a prior year
or be a day on which the trust was not subject to this section.

(6) In determining the sum of the net fair market values of the assets
held in the trust for purposes of subparagraphs (b)(1), (2) and (3), and
in determining whether an adjustment is required in accordance with
subparagraph (b)(4) or (5), there shall not be taken into account the
value:

(A) of any residential property or any tangible personal property
that, as of the beginning of the first business day of the current
valuation year, one or more current beneficiaries of the trust have or
had the right to occupy, or have or had the right to possess or control
(other than in his or her capacity as a trustee of the trust), and
instead the right of occupancy or the right to possession or control
shall be deemed to be the unitrust amount with respect to such
residential property or such tangible personal property; provided,
however, that the unitrust amount shall be adjusted in accordance with
subparagraphs (b) (4) and (5) for partial distributions from or receipt
into the trust of such residential property or tangible personal
property during the current valuation year.

(B) of any asset specifically given to a beneficiary and the return on
investment on such property, which return on investment shall be
distributable to such beneficiary.

(C) of any assets while held in a testator's estate.

(D) of (i) amounts paid or distributed to the trust by a decedent's
estate, another trust or another payor, as income pursuant to article
11-A attributable to an asset or amount due to the trust for a period
prior to its payment or distribution to the trust, unless and except to
the extent that the unitrust trustee, having the power to accumulate
income, shall have determined to accumulate and add such income to
principal, and such unaccumulated net income shall be distributable to
the beneficiaries of the trust; or (ii) any amount paid or distributed
by such decedent's estate, other trust or other payor, directly to
beneficiaries of the trust in satisfaction of their ultimate entitlement
to such income.

(7) In determining the net fair market value of each asset held in the
trust pursuant to subparagraphs (b)(1), (2) and (3), the trustee shall,
not less often than annually, determine the fair market value of each
asset of the trust that consists primarily of real property or other
property that is not traded on a regular basis in an active market, and
all such determinations shall, if made reasonably and in good faith, be
conclusive on all persons interested in the trust. Such determination
shall be conclusively presumed to have been made reasonably and in good
faith unless proven otherwise in a proceeding commenced by or on behalf
of a person interested in the trust within three years after the close
of the year in which the determination is made.

(8) The term "trustee" does not include a personal representative.

(9) The term "trust" does not include an estate.

(d) Commencement of current beneficiary's interest.

(1) The interest of a current beneficiary or class of current
beneficiaries in the unitrust amount begins on the date on which this
section becomes applicable to the trust pursuant to clause (e)(4)(A), or
if later the date assets first become subject to the trust. An asset
becomes subject to a trust:

(A) on the date it is transferred to the trust in the case of an asset
that is transferred to a trust during the transferor's life;

(B) on the date it is transferred to the trust in the case of an asset
that is transferred to a testamentary trust created under a will;

(C) on the date of an individual's death in the case of an asset that
is transferred to a trust by a third party by reason of the individual's
death;

(D) on the date of an individual's death in the case of a trust that
owns life insurance on the individual's life; or

(E) on the date a revocable trust becomes irrevocable in the case of
assets then held in the trust.

(2) A trust which continues in existence for the benefit of one or
more new current beneficiaries or class of current beneficiaries upon
the termination of the interests of all prior current beneficiaries or
classes of prior current beneficiaries, shall be deemed to be a new
trust, and, for purposes of clauses (e)(1)(B) and (e)(4)(A) and
subparagraph (d)(1), assets shall be deemed to first become subject to
the trust on the date of the termination of such interests.

(e) Trusts to which section applies.

(1) This section shall apply to any trust if:

(A) the governing instrument provides that this section shall apply to
such trust, or

(B) (i) with respect to a trust in existence prior to January first,
two thousand two, on or before December thirty-first, two thousand five,
the trustee, with the consent by or on behalf of all persons interested
in the trust or in his, her or its discretion, elects to have this
section apply to such trust, or

(ii) with respect to a trust not in existence prior to January first,
two thousand two, on or before the last day of the second full year of
the trust beginning after assets first become subject to the trust, the
trustee, with the consent by or on behalf of all persons interested in
the trust or in his, her or its discretion, elects to have this section
apply to such trust.

(iii) An election in accordance with this subparagraph shall be made
by an instrument, executed and acknowledged, and delivered to the
creator of the trust, if he or she is then living, to all persons
interested in the trust or to their representatives and to the court, if
any, having jurisdiction over the trust.

(2) (A) The court having jurisdiction of a trust to which this section
otherwise would apply by reason of subparagraph (e)(1) or clause
(e)(2)(B), upon the petition of the trustee or any beneficiary of the
trust and upon notice to all persons interested in the trust, may direct
that article 11-A shall apply to the trust and that this section shall
not apply to the trust; and

(B) At any time, the court having jurisdiction of a trust to which
this section otherwise would not apply, upon the petition of the trustee
or any beneficiary of the trust and upon notice to all persons
interested in the trust, may direct that this section shall apply to the
trust and that article 11-A shall not apply to the trust.

(3) For the purposes of this section, the phrase "all persons
interested in the trust" shall mean all the persons upon whom service of
process would be required in a proceeding for the judicial settlement of
the account of the trustee, taking into account section three hundred
fifteen of the surrogate's court procedure act. Where a person
interested in the trust has the same interest as a person under a
disability, it shall not be necessary to obtain the consent of or notify
the person under a disability.

(4) (A) This section shall apply to a trust with respect to which
there is:

(i) a direction in the governing instrument in accordance with clause
(e)(1)(A), as of the date provided for in such governing instrument, or
if there is no provision then as of the day on which assets first become
subject to the trust;

(ii) an election in accordance with clause (e)(1)(B), as of the date
specified in the election, which may be any day within the year in which
the election is made or the first day of the year commencing after the
election is made; or a

(iii) court decision rendered in accordance with clause (e)(2)(B) as
of the date specified by the court in its decision;

Provided, however, that if later than any date set by this clause,
this section shall not apply to the trust until January first, two
thousand two.

(B) If this section applied to a trust with respect to which a court
decision is rendered in accordance with clause (e)(2)(A), this section
shall cease to apply to such trust and article 11-A shall apply to the
trust as of the first day of the year beginning after the decision of
the court becomes final, unless the court in its decision provides
otherwise.

(5) In the determination of whether article 11-A or this section
should apply to a trust:

(A) All of the factors relevant to the trust and its beneficiaries,
including the following factors to the extent they are relevant, shall
be considered:

(i) the nature, purpose, and expected duration of the trust;

(ii) the intent of the creator of the trust;

(iii) the identity and circumstances of the beneficiaries;

(iv) the needs for liquidity, regularity of payment, and preservation
and appreciation of capital;

(v) the assets held in the trust; the extent to which they consist of
financial assets, interests in closely held enterprises, tangible and
intangible personal property, or real property; the extent to which an
asset is used by a beneficiary; and whether an asset was purchased by
the trustee or received from the creator of the trust.

(B) In any proceeding brought pursuant to subparagraph (e)(2), there
shall be a rebuttable presumption that this section should apply to the
trust.

(f) Trusts to which this section shall not apply. This section shall
not apply to a trust if:

(1) the governing instrument provides in substance that this section
shall not apply;

(2) the trust is a pooled income fund described in section 642(c)(5)
of the United States internal revenue code of 1986;

(3) the trust is a charitable remainder annuity trust or a charitable
remainder unitrust described in section 664 of the United States
internal revenue code of 1986; or

(4) the trust is an irrevocable lifetime trust which provides for
income to be paid for the life of a grantor, and possessing or
exercising the power to make this section apply would cause any public
benefit program to consider additional amounts of principal or income to
be an available resource or available income, and the principal or
income or both would in each case not be considered an available
resource or income, if there was no power to make this section apply,
if, based upon the facts and circumstances surrounding the formation of
such trust, it can reasonably be concluded that the primary purpose for
the establishment of the trust was to ensure that the trust principal
would not be treated as an available resource for the purposes of a
governmental assistance program.