AL SB251

Amends Sections 19-3A-409 and 19-3A-505 of the Alabama Principal and Income Act to update the law based on changes to the Uniform Principal and Income Act.

Clarifies how fiduciaries must allocate payments between principal and income, including payments from separate funds and entities, and updates withholding procedures to reflect current Internal Revenue Service policy.

Introduces an "unincorporated entity" concept to address trustee-operated businesses including farming, livestock operations, and rental real estate investments.

Aligns the Principal and Income Act with the Alabama Uniform Prudent Investor Act, particularly regarding investing for total return rather than a specific income level.

Becomes effective January 1, 2013, with different application dates depending on whether a trust was funded before, during, or after the calendar year beginning January 1, 2013.