New Mexico § 46-3A-201 - Determination and distribution of net income

§ 46-3A-201. Determination and distribution of net income

After a decedent dies, in the case of an estate or after an income interest in a trust

ends, the following rules apply: (1) A fiduciary of an estate or of a terminating income interest shall determine the

amount of net income and net principal receipts received from property specifically

given to a beneficiary under the rules in Articles 3 through 5 which apply to trustees

and the rules in Paragraph (5). The fiduciary shall distribute the net income and net principal receipts to the

beneficiary who is to receive the specific property. (2) A fiduciary shall determine the remaining net income of a decedent's estate or

a terminating income interest under the rules in Articles 3 through 5 which apply

to trustees and by: (A) including in net income all income from property used to discharge liabilities; (B) paying from income or principal, in the fiduciary's discretion, fees of attorneys,

accountants and fiduciaries; court costs and other expenses of administration; and

interest on death taxes, but the fiduciary may pay those expenses from income of property

passing to a trust for which the fiduciary claims an estate tax marital or charitable

deduction only to the extent that the payment of those expenses from income will not

cause the reduction or loss of the deduction; and (C) paying from principal all other disbursements made or incurred in connection with

the settlement of a decedent's estate or the winding up of a terminating income interest,

including debts, funeral expenses, disposition of remains, family allowances and death

taxes and related penalties that are apportioned to the estate or terminating income

interest by the will, the terms of the trust or applicable law. (3) A fiduciary shall distribute to a beneficiary who receives a pecuniary amount

outright the interest or any other amount provided by the will, the terms of the trust

or applicable law from net income determined under Paragraph (2) or from principal

to the extent that net income is insufficient. If a beneficiary is to receive a pecuniary amount outright from a trust after an

income interest ends and no interest or other amount is provided for by the terms

of the trust or applicable law, the fiduciary shall distribute the interest or other

amount to which the beneficiary would be entitled under applicable law if the pecuniary

amount were required to be paid under a will. (4) A fiduciary shall distribute the net income remaining after distributions required

by Paragraph (3) in the manner described in Section 202 to all other beneficiaries,

including a beneficiary who receives a pecuniary amount in trust, even if the beneficiary

holds an unqualified power to withdraw assets from the trust or other presently exercisable

general power of appointment over the trust. (5) A fiduciary may not reduce principal or income receipts from property described

in Paragraph (1) because of a payment described in Section 501 or 502 to the extent

that the will, the terms of the trust or applicable law requires the fiduciary to

make the payment from assets other than the property or to the extent that the fiduciary

recovers or expects to recover the payment from a third party. The net income and principal receipts from the property are determined by including

all of the amounts the fiduciary receives or pays with respect to the property, whether

those amounts accrued or became due before, on or after the date of a decedent's death

or an income interest's terminating event, and by making a reasonable provision for

amounts that the fiduciary believes the estate or terminating income interest may

become obligated to pay after the property is distributed.