DEFINING THE TERM "PRINCIPAL" IN ACCOUNTING AND DISTRIBUTION OF TRUST FUNDS
AN ACT TO AMEND CHAPTER 117 OF THE REVISED CODE OF DELAWARE, 1935, BY DEFINING THE TERM "PRINCIPAL" IN ACCOUNTING AND DISTRIBUTION OF TRUST FUNDS.
Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:
Section 1. That Chapter 117 of the Revised Code of Delaware, 1935, be amended by adding a new section thereto to be styled Section 35A thereof as follows:
Section 35A: If any part of the funds of a trust shall be invested in bonds or other obligations for the payment of money, unless otherwise provided in the instrument creating such trust, the cost of such bonds or obligations as of the date of the purchase of the same by the trustee, if purchased, or the market value of such bonds or obligations as of the date of acquisition of the same by transfer from an executor or administrator, if same are acquired by the trustee by transfer from an executor or administrator, shall be treated as principal, regardless of their par or maturity value, and any gain or loss realized upon the sale or other disposition thereof shall enure to or fall upon the principal of such trust except that in the event non-interest bearing bonds or obligations are purchased on a discount basis, then the discount, when received shall be income. Unless otherwise provided in the instrument creating a trust the trustee thereof shall not be required to, but may if the trustee deems it desirable, set aside a sinking fund out of the income of the trust to offset depreciation, obsolescense, amortization or other waste of the principal of the trust.
Approved May 1, 1939.
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