§ 11-A-2.1 Determination and distribution of net income

After a decedent dies, in the case of an estate, or after an income
interest in a trust ends, the following rules apply:

(1) A fiduciary of an estate or of a terminating income interest shall
determine the amount of net income and net principal receipts received
from property specifically given to a beneficiary under the rules in
parts 3 through 5 which apply to trustees and the rules in paragraph
(5). The fiduciary shall distribute the net income and net principal
receipts to the beneficiary who is to receive the specific property.

(2) A fiduciary shall determine the remaining net income of a
decedent's estate or a terminating income interest under the rules in
parts 3 through 5 which apply to trustees and by:

(A) including in net income all income from property used to discharge
liabilities;

(B) paying from income or principal, in the fiduciary's discretion,
fees of attorneys, accountants, and fiduciaries; court costs and other
expenses of administration; and interest on death taxes, but the
fiduciary may pay those expenses from income of property passing to a
trust for which the fiduciary claims an estate tax marital or charitable
deduction only to the extent that the payment of those expenses from
income will not cause the reduction or loss of the deduction; and

(C) paying from principal all other disbursements made or incurred in
connection with the settlement of a decedent's estate or the winding up
of a terminating income interest, including debts, funeral expenses,
disposition of remains, family allowances, and death taxes and related
penalties that are apportioned to the estate or terminating income
interest by the will, the terms of the trust, or applicable law.

(3) Unless otherwise provided by the terms of the will or trust,
commencing (A) seven months from either the date of death or other date
a beneficiary is to receive a pecuniary amount outright if letters are
not required, unless the beneficiary is a genetic child, then such date
shall be the later of the aforementioned time periods in this
subparagraph or the date of birth of the genetic child entitled to
inherit from the child's genetic parent under section 4-1.3 of this
chapter, or (B) seven months from the time letters, including
preliminary or temporary letters, are granted if letters are required,
unless the beneficiary is a genetic child, then such date shall be the
later of the aforementioned time period in this subparagraph or the date
of birth of the genetic child entitled to inherit from the child's
genetic parent under section 4-1.3 of this chapter, a fiduciary shall
distribute income to a beneficiary who receives a pecuniary amount
outright, from net income determined under paragraph (2) or from
principal to the extent that net income is insufficient, of an amount
equal to the pecuniary amount multiplied by an income factor, which
shall be set (or reset) on the first business day of each calendar year
and fixed for that calendar year at the target Federal funds rate as
announced by the Federal Reserve Board (or in the event the target
Federal funds rate is a range of rates, the high of that range) less one
percent, but in no event less than one-half of one percent.

(4) A fiduciary shall distribute the net income remaining after
distributions required by paragraph (3) in the manner described in
11-A-2.2 to all other beneficiaries, including a beneficiary who
receives a pecuniary amount in trust, even if the beneficiary holds an
unqualified power to withdraw assets from the trust or other presently
exercisable general power of appointment over the trust.

(5) A fiduciary may not reduce principal or income receipts from
property described in paragraph (1) because of a payment described in
11-A-5.1 or 11-A-5.2 to the extent that the will, the terms of the
trust, or applicable law requires the fiduciary to make the payment from
assets other than the property or to the extent that the fiduciary
recovers or expects to recover the payment from a third party. The net
income and principal receipts from the property are determined by
including all of the amounts the fiduciary receives or pays with respect
to the property, whether those amounts accrued or became due before, on,
or after the date of a decedent's death or an income interest's
terminating event, and by making a reasonable provision for amounts that
the fiduciary believes the estate or terminating income interest may
become obligated to pay after the property is distributed.