CA AB229

Amends Section 16361 of the Probate Code to clarify rules for allocating trust income and principal from separate funds (annuities, retirement accounts, pension plans, etc.)

Clarifies that when a separate fund payer does not provide documentation of internal income AND the trustee cannot determine the fund's value, the internal income is deemed equal to the product of the interest rate and present value of expected future payments under Internal Revenue Code Section 7520

Maintains existing rules that when documentation is provided, trustees allocate internal income as if the separate fund were a trust subject to the act, and when the fund value can be determined but documentation is not provided, internal income is deemed to equal 4 percent of the fund's value

Applies to trusts that qualify for or elect a marital tax deduction under Internal Revenue Code Sections 2056(b)(5) and 2056(b)(7), with limited exceptions

Effective July 15, 2010