HB394 Summary

• Amends Alabama Principal and Income Act to add "unitrust amount" definition and authorize conversion of trusts to unitrusts, making provisions consistent with federal law.

• Permits trustees to convert trusts into unitrusts (distributions based on fixed percentage of net asset value between 3-5%) if conversion will better carry out settlor's intent, with written notice to beneficiaries and 60-day objection period.

• Allows qualified beneficiaries to petition court to order conversion to unitrust even if trustee objects, provided conversion serves settlor's intent or all beneficiaries consent.

• Establishes express unitrusts that distribute fixed percentages (3-5%) of net fair market value annually without deducting income expenses, with trustee discretion over payment frequency and asset valuation methods.

• Clarifies that Alabama Uniform Trust Code applies to Principal and Income Act except where inconsistent, and becomes effective three months after passage.