CHAPTER 121

AN ACT TO AMEND CHAPTER 35, TITLE 12, DELAWARE CODE, RELATING TO TRUSTS.

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Chapter 35, Title 12, Delaware Code, is amended by adding a new section to be known as § 3526.

§ 3526. Corporate distributions received by Trustee; allocation between principal and income

Unless expressly or by necessary implication provided otherwise in the instrument creating or defining the duties and powers of a Trustee, a Trustee shall treat all property, tangible or intangible, received as a corporate distribution upon or with respect to shares of stock held in trust, including shares of the same class:

(a) As trust income to the extent that, in the judgment of the Trustee, such distribution would be regarded as income from an investment rather than a diminution of an income producing property, by men of prudence, discretion, and intelligence in the management of their own affairs; and in making this determination, the Trustee may consider whether such distribution would be likely, of itself, to have the effect of reducing materially the future earning capacity and the future earnings of the corporation, whether such distribution would be likely, of itself, to have the effect of reducing materially the future income of the trust from the shares of stock upon or with respect to which such distribution shall be made (assuming that the trustee should continue to hold such shares of stock for an indefinite period), and any other circumstances and factors which the trustee may deem relevant and significant.

(b) As trust principal to the extent that, in the judgment of Trustee, such distribution is not determined to be trust income under provisions of the preceding division (a) of this section.

(c) The provisions of this Act shall apply to any corporate distributions hereafter received on trust property in any trust now existing or hereafter created.

(d) If any provision of this Act or the application thereof to any person or circumstance shall be held invalid, such invalidity shall not affect any other provision nor application of the Act which can be given effect without the invalid provision or application, and to this end the several provisions of this Act are declared to be severable.

Approved July 1, 1959.