KRS 386.464: "Undistributed income" defined -- Apportionment when income interest

ends.

(1) In this section, "undistributed income" means net income received before the date

on which an income interest ends. The term shall 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.

(2) When a mandatory income interest ends, the trustee shall pay to a mandatory

income beneficiary who survives that date, or the estate of a deceased mandatory

income beneficiary whose death causes the interest to end, the beneficiary's share of

the undistributed income that is not disposed of under the terms of the trust unless

the beneficiary has an unqualified power to revoke more than five percent (5%) of

the trust immediately before the income interest en ds. In the latter case, the

undistributed income from the portion of the trust that may be revoked shall be

added to principal.

(3) When a trustee's obligation to pay a fixed annuity or a fixed fraction of the value of

the trust's assets ends, the trustee shall prorate the final payment if and to the extent

required by applicable law to accomplish a purpose of the trust or its settlor relating

to income, gift, estate, or other tax requirements. The settlor may change the

charitable beneficiary of a trust by will or through written notice to trustee, or may

decline to make a change in like manner, so long as the change does not alter the

income, gift, estate, or other tax benefits available under the terms of the trust.