Under existing law, the Alabama Principal and Income Act, which is based on the Uniform Principal and Income Act, provides procedures for the trustee of a trust to distinguish between the principal of a trust which is generally preserved for the remainder beneficiaries and the income of a trust which is distributed to the income beneficiaries.
This bill would amend the Alabama Principal and Income Act to incorporate changes in the Uniform Principal and Income Act. The bill would update the act to reflect current policy of the Internal Revenue Service and to clarify technical language regarding withholdings; clarify allocations of acquired assets, such as those from corporate distributions; include an "unincorporated entity" concept to deal with businesses operated by a trustee, including farming and livestock operations, and investment activities in rental real estate, natural resources, and timber; and conform the changes to the Alabama Uniform Prudent Investor Act, especially the provisions related to investing for total return instead of for a certain level of income.
Source: Alabama Legislature