§60-175.412. Timber.

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TIMBER

A. To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee shall allocate the net receipts:

1. To income to the extent that the amount of timber removed from the land does not exceed the estimated rate of growth of the timber during the accounting periods in which a beneficiary has a mandatory income interest;

2. To principal to the extent that the amount of timber removed from the land exceeds the estimated rate of growth of the timber or the net receipts are from the sale of standing timber;

3. To or between income and principal if the net receipts are from the lease of timberland or from a contract to cut timber from land owned by a trust, by determining the amount of timber removed from the land under the lease or contract and applying the rules in paragraphs 1 and 2 of this subsection; or

4. To principal to the extent that advance payments, bonuses, and other payments are not allocated pursuant to paragraph 1, 2, or 3 of this subsection.

B. In determining net receipts to be allocated pursuant to subsection A of this section, a trustee may deduct and transfer to principal a reasonable amount for depletion.

C. This act applies whether or not a decedent or transferor was harvesting timber from the property before it became subject to the trust.

D. If a trust exists on the effective date of this act, the trustee may allocate receipts from an interest in timber as provided in this act or in the manner used by the trustee before the effective date of this act. For every trust created after the effective date of this act, the trustee shall allocate receipts from an interest in timber as provided in this act. If and to the extent that the terms of a trust expressly provide for a different allocation of receipts or grants the trustee discretionary authority to determine the amount of the allocation, this act shall not apply to those receipts.

Added by Laws 1998, c. 115, § 21, eff. Nov. 1, 1998. Amended by Laws 1999, c. 419, § 3, emerg. eff. June 10, 1999.