CHAPTER 225 – COURT OF CHANCERY

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 Section 35A of Chapter 117 of the Revised Code of Delaware, 1935, as amended by Chapter 206 of Volume 41 Laws of Delaware, and as further amended by Chapter 150 of Volume 42 Laws of Delaware, be and the same is hereby further amended by striking out all of Section 35A of said Chapter, as contained in said Chapter 206 of Volume 41 and as contained in Chapter 150 of Volume 42, and inserting in lieu thereof the following:

Section 35A: If any part of the funds of a trust shall be invested in bonds or other obligations for the payment of money, the cost of such bonds or obligations as of the date of the purchase thereof by the trustee, if purchased, or the market value of such bonds or obligations as of the date of acquisition thereof by transfer from an executor or administrator or a donor, if such bonds or obligations shall have been acquired by the trustee by such transfer, shall, unless otherwise provided in the instrument creating such trust, be treated as principal, regardless of their face value, and, unless otherwise provided in the instrument creating such trust, the trustee of such trust may but shall not be required to amortize and charge against the income of such bond or other obligation the amount, if any, by which the principal value so determined shall exceed the face value of such bond or other obligation.

Upon the sale, call or exchange of any such bond or other obligation purchased or otherwise acquired as above provided at a value in excess of the face value thereof, the gain or loss resulting from such sale, call or exchange shall, unless other

wise provided in the instrument creating such trust, inure to or fall upon the principal of such trust, provided that such portion of any such gain as does not exceed the amounts if any previously charged against income from such bond or other obligation for amortization, shall be credited to the income of the trust, and provided further that in the event non-interest-bearing bonds or obligations shall have been purchased on a discount basis, the discount when received shall be income.

Approved April 17, 1941.