                                 CODE OF VIRGINIA

DEFERRED COMPENSATION, ANNUITY, OR SIMILAR PAYMENT (§ 64.2-1056)

A. As used in this section:
			&#8220;Internal income of a separate fund&#8221; means the amount determined
under subsection B.
			&#8220;Marital trust&#8221; means a trust:

   1. Of which the settlor&#8217;s surviving spouse is the only current income
   beneficiary and is entitled to a distribution of all of the current net income
   of the trust; and

   2. That qualifies for a marital deduction with respect to the settlor&#8217;s
   estate under &#xA7; 2056 of the Internal Revenue Code of 1986, as amended,
   because:
   				a. An election to qualify for a marital deduction under &#xA7; 2056(b)(7)
   of the Internal Revenue Code of 1986, as amended, has been made; or
   				b. The trust qualifies for a marital deduction under &#xA7; 2056(b)(5) of
   the Internal Revenue Code of 1986, as amended.
   				&#8220;Payment&#8221; means an amount a fiduciary may receive over a fixed
   number of years or during the life of one or more individuals because of
   services rendered or property transferred to the payor in exchange for future
   amounts the fiduciary may receive. &#8220;Payment&#8221; includes an amount
   received in money or property from the payor&#8217;s general assets or from a
   separate fund created by the payor.
   				&#8220;Separate fund&#8221; includes a private or commercial annuity, an
   individual retirement account, and a pension, profit-sharing, stock-bonus, or
   stock-ownership plan.

B. For each accounting period, the following rules apply to a separate fund:

   1. The fiduciary shall determine the internal income of the separate fund as
   if the separate fund were a trust subject to this chapter.

   2. If the fiduciary cannot determine the internal income of the separate fund
   under subdivision 1, the internal income of the separate fund is deemed to
   equal four percent of the value of the separate fund, according to the most
   recent statement of value preceding the beginning of the accounting period.

   3. If the fiduciary cannot determine the value of the separate fund under
   subdivision 2, the value of the separate fund is deemed to equal the present
   value of the expected future payments, as determined under &#xA7; 7520 of the
   Internal Revenue Code of 1986, as amended, for the month preceding the
   beginning of the accounting period for which the computation is made.

C. A fiduciary shall allocate a payment received from a separate fund during an
accounting period to income, to the extent of the internal income of the
separate fund during the period, and the balance to principal.

D. The fiduciary of a marital trust shall:

   1. Withdraw from a separate fund the amount the current income beneficiary of
   the trust requests the fiduciary to withdraw, not greater than the amount by
   which the internal income of the separate fund during the accounting period
   exceeds the amount the fiduciary otherwise receives from the separate fund
   during the period;

   2. Transfer from principal to income the amount the current income beneficiary
   requests the fiduciary to transfer, not greater than the amount by which the
   internal income of the separate fund during the period exceeds the amount the
   fiduciary receives from the separate fund during the period after the
   application of subdivision 1; and

   3. Distribute to the current income beneficiary as income:
   				a. The amount of the internal income of the separate fund received or
   withdrawn during the period; and
   				b. The amount transferred from principal to income under subdivision 2.

E. For a trust, other than a marital trust, of which one or more current income
beneficiaries are entitled to a distribution of all of the current net income,
the fiduciary shall transfer from principal to income the amount by which the
internal income of a separate fund during the accounting period exceeds the
amount the fiduciary receives from the separate fund during the period.

HISTORY: 2022, c. 354.