Situations 1-114

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, PC in Woodbury, New York
• Pages: 17-96

UPAIA

(Situation 1)

Jack died on July 1, 2013. His will, dated January 15, 2001, provided for a

trust for the benet of his only child, Fred. Fred is the income beneciary

of the trust. The remainderman of the trust is Jack’s grandchild, Martin.

Question: Does the UPAIA apply to this trust?

Answer: Yes. According to New York Law, EPTL 11-A-6.3, the effec-

tive date of the law is January 1, 2002. According to EPTL

11-A-6.4 the UPAIA rules generally apply to any receipt or

expense received or incurred on or after January 1, 2002,

by any trust or decedent’s estate established before or after

January 1, 2002, and regardless of whether or not the asset

involved was acquired by the trustee before or after January

1, 2002.

UPAIA

(Situation 2)

Assume the facts in Situation 1 except that the will was executed on Janu-

ary 15, 2013, instead of January 15, 2001.

Question: Does the UPAIA apply to this trust?

Answer: Generally, yes. According to EPTL 11-A-6.4 the UPAIA

applies to any trust or decedent’s estate established on or after

January 1, 2002, except to the extent that the trust instrument

or the will provides otherwise or unless an election or court

decision is made pursuant to the unitrust rules to make the

UPAIA not apply to the trust.

17

SITUATIONS 1 –114

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UPAIA

(Situation 3)

Question: Could Jack’s will have been amended before his death to

provide that the UPAIA shall not apply to his estate and any

trust created thereunder?

Answer : Yes. The terms of the governing instrument may override the

UPAIA in whole or in part. According to EPTL 11-A-1.3(a)

(1), a duciary must administer a trust or estate in accordance

with the terms of the trust or the will even if there is a differ-

ent provision in [the UPAIA]. In addition, EPTL 11-A-1.3(a)

(2), provides that a duciary may administer a trust or estate

by the exercise of a discretionary power given to the duciary

by the terms of the trust or the will, even if the exercise of

the power produces a result different from a result required

or permitted by [the UPAIA].

UPAIA

(Situation 4)

Assume the facts in situation 1. Further assume that the UPAIA would

otherwise apply to Jack’s estate and the trust he established under his will

dated January 15, 2013.

Question: Is there any other provision in the law that overrides the

application of the UPAIA?

Answer: Yes. According to EPTL 11-A-6.4 if an election is made or a

court decision is made to implement the unitrust provisions

under EPTL 11–2.4, then the UPAIA does not apply. If at a

later date the unitrust provisions no longer apply, then the

UPAIA will apply.

| F   I   P R  N Y18

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UPAIA

(Situation 5)

Question: Must Fred receive the income from the trust?

Answer: Maybe. According to EPTL 11-A-1.2(5), an income bene-

ciary means a person to whom net income of a trust is or may

be payable. According to EPTL 11-A-1.2(7), a mandatory

income interest means the right of an income beneciary

to receive net income that the terms of the trust require the

duciary to distribute.

UPAIA

(Situation 6)

Assume the facts in Situation 1. Also assume that Fred must receive the

income from the trust. Therefore, Fred has a mandatory income inter-

est in the trust. Further assume that Fred died on October 4, 2013. An

interest check in the amount of $20,000 is due on October 1, 2013, but

is received by the trustee on October 10, 2013.

Question: Is Fred’s estate entitled to the $20,000 interest check that the

trustee receives?

Answer: Probably not. In the absence of a provision in the govern-

ing instrument, Fred’s estate is entitled only to undistributed

income. According to EPTL 11-A-3.3(a), undistributed

income means net income received on or before the date

on which an income interest ends. According to EPTL

11-A-3.3(a), the term [“undistributed income”] does not

include an item of income or expense that is due or accrued

or net income that has been added or is required to be added

to principal under the terms of the trust.

Author’s Note

The prior law (before the UPAIA) did not use the term “undistributed

income” when a mandated income beneciary died. Instead, an accrual

19Situations 1 –114 |

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