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<p class="MsoNormal">Thank you, Donna. This is really helpful.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal" style="margin-left:-5.25pt;text-autospace:none">Warmest regards, <o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt;text-autospace:none"><span style="font-size:16.0pt;font-family:"Script MT Bold";color:black">Rebecca King</span><span style="font-size:12.0pt"> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt;text-autospace:none"><span style="font-family:"Book Antiqua",serif;color:black">Attorney </span><o:p></o:p></p>
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<p class="MsoNormal" style="margin-left:-5.25pt"><b><span style="font-size:12.0pt;font-family:"Book Antiqua",serif">Northwest Elder Law Group</span></b><b><span style="font-family:"Book Antiqua",serif"> </span></b><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif">2150 N. 107<sup>th
</sup>Street, Suite 501 </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif">Seattle, WA 98133 </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif">Main: (206) 937-6102 </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif">Direct Line and Fax: (206) 866-6544 </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif">www.nwelg.com </span><o:p></o:p></p>
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<p class="MsoNormal" style="margin-left:-5.25pt;background:white"><b><i><span style="font-size:12.0pt;font-family:"Book Antiqua",serif;color:black">Recognized for Providing Services in Elder Law</span></i></b><b><span style="font-size:12.0pt;color:#201F1E"> </span></b><o:p></o:p></p>
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<p class="MsoNormal" style="margin-left:-5.25pt;background:white"><span style="font-family:"Book Antiqua",serif;color:black">CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, is for the sole use of the intended recipient(s) and may contain
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<p class="MsoNormal"><b><span style="mso-ligatures:none">From:</span></b><span style="mso-ligatures:none"> wsbapt-bounces@lists.wsbarppt.com <wsbapt-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Donna Calf Robe<br>
<b>Sent:</b> Friday, January 12, 2024 9:26 AM<br>
<b>To:</b> WSBA Probate & Trust Listserv <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBAPT] Trust Question re Capital Gains Income<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Hi Rebecca,<o:p></o:p></p>
<p class="MsoNormal">I had to research this issue a few years ago and saved some of the info I found, but now I cant locate the source. So for what its worth, below is part of what I found:<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p style="mso-margin-top-alt:0in;margin-right:0in;margin-bottom:21.0pt;margin-left:0in;background:white">
<span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">by default, under </span><span style="color:black"><a href="http://www.leimberg.com/freeresources/truarticles/primeronuniformprincipal.html" target="_blank"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#0000CC">the
Uniform Principal and Income Act (UPIA)</span></a></span><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">, capital gains are treated as principal for fiduciary trust accounting purposes. This can be overridden </span><span style="color:black"><a href="http://cbmslaw.com/reducing-income-taxes-for-estates-and-trusts/" target="_blank"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#0000CC">if
the trust document itself stipulates that capital gains will be treated as income (in which case the trust document supersedes the UPIA default provisions), or if the trustee is granted discretion to determine whether capital gains will be treated as income
or principal</span></a></span><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">. And if the trust allows capital gains to be treated as income, </span><span style="color:black"><a href="https://www.law.cornell.edu/cfr/text/26/1.643(a)-3" target="_blank"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#0000CC">Treasury
Regulation 1.643(a)-3(b)</span></a></span><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333"> allows those capital gains to be eligible for the DNI deduction as well. However, if the trust is silent on these issues, and/or the trustee
doesn’t have discretion to adjust the treatment, capital gains remained “principal” for trust accounting purposes (and therefore ineligible for the DNI deduction).</span><o:p></o:p></p>
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<p class="MsoNormal" style="background:white"><b><i><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D;mso-ligatures:none">Donna<o:p></o:p></span></i></b></p>
<p class="MsoNormal" style="background:white"><b><i><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D;mso-ligatures:none"><o:p> </o:p></span></i></b></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;mso-ligatures:none">Donna M. Calf Robe<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;mso-ligatures:none">Attorney<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;mso-ligatures:none">Brothers & Henderson, P.S.<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Times New Roman",serif;color:black;mso-ligatures:none">936 N 34<sup>TH</sup> Street, Suite 200<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Times New Roman",serif;color:black;mso-ligatures:none">Seattle, WA 98103</span><span style="font-family:"Times New Roman",serif;mso-ligatures:none"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Times New Roman",serif;color:black;mso-ligatures:none">Phone: (206) 324-4300 x113</span><span style="font-family:"Times New Roman",serif;mso-ligatures:none"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Times New Roman",serif;color:black;mso-ligatures:none">Fax: (206) 324-3106</span><span style="font-family:"Times New Roman",serif;mso-ligatures:none"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Times New Roman",serif;color:black;mso-ligatures:none">e-mail:
<a href="mailto:donnac@brothershenderson.com">donnac@brothershenderson.com</a></span><span style="font-family:"Times New Roman",serif;mso-ligatures:none"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Times New Roman",serif;color:black;mso-ligatures:none"><a href="http://www.brothershenderson.com/"><span style="color:blue">www.brothershenderson.com</span></a></span><span style="font-family:"Times New Roman",serif;mso-ligatures:none"><o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Times New Roman",serif;color:black;mso-ligatures:none">The information transmitted in this e-mail message and attachments is attorney-client information, is privileged or confidential material
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<p class="MsoNormal"><b><span style="mso-ligatures:none">From:</span></b><span style="mso-ligatures:none">
<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Rebecca King<br>
<b>Sent:</b> Friday, January 12, 2024 9:03 AM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> [WSBAPT] Trust Question re Capital Gains Income<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Hi everyone,<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Trust language says, “After the death of the Grantor and Grantor’s spouse, the Trustee shall distribute the net income of the Family Trust equally to the surviving children of the Grantor.” The principal continues to be held in Trust.
If assets are sold which have capital gains, does that capital gains income need to be paid out to the Grantor’s children? There is no definition of “income” in the Trust. I cannot find any case law on point, which is surprising because I would think this
issue would come up all the time for Credit Shelter/QTIP trusts.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Thank you!<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal" style="margin-left:-5.25pt;text-autospace:none"><span style="font-size:16.0pt;font-family:"Script MT Bold";color:black">Rebecca King</span><span style="font-size:12.0pt"> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt;text-autospace:none"><span style="font-family:"Book Antiqua",serif;color:black">Attorney </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt;text-autospace:none"> <o:p></o:p></p>
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<p class="MsoNormal" style="margin-left:-5.25pt"><b><span style="font-size:12.0pt;font-family:"Book Antiqua",serif">Northwest Elder Law Group</span></b><b><span style="font-family:"Book Antiqua",serif"> </span></b><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif">2150 N. 107<sup>th
</sup>Street, Suite 501 </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif">Seattle, WA 98133 </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif">Main: (206) 937-6102 </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif">Direct Line and Fax: (206) 866-6544 </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif"><a href="http://www.nwelg.com">www.nwelg.com</a> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt"><span style="font-family:"Book Antiqua",serif"> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:-5.25pt;background:white"><b><i><span style="font-size:12.0pt;font-family:"Book Antiqua",serif;color:black">Recognized for Providing Services in Elder Law</span></i></b><b><span style="font-size:12.0pt;color:#201F1E"> </span></b><o:p></o:p></p>
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