Okla. Stat. tit. 60, § 60-175.409

payments.

DEFERRED COMPENSATION, ANNUITIES, AND SIMILAR PAYMENTS

A. In this section:

1. “Payment” means a payment that a trustee may receive over a

fixed number of years or during the life of one or more individuals

because of services rendered or property transferred to the payer in

exchange for future payments. The term includes a payment made in

money or property from the payer's general assets or from a separate

fund created by the payer. For purposes of subsections D, E, F, and

G of this section, the term also includes any payment from any

separate fund, regardless of the reason for the payment; and

2. “Separate fund” includes a private or commercial annuity, an

individual retirement account, and a pension, profit-sharing, stock-

bonus, or stock-ownership plan.

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B. To the extent that a payment is characterized as interest or

a dividend or a payment made in lieu of interest or a dividend, a

trustee shall allocate it to income. The trustee shall allocate to

principal the balance of the payment and any other payment received

in the same accounting period that is not characterized as interest,

a dividend, or an equivalent payment.

C. If no part of a payment is characterized as interest, a

dividend, or an equivalent payment, and all or part of the payment

is required to be made, a trustee shall allocate to income ten

percent (10%) of the part that is required to be made during the

accounting period and the balance to principal. If no part of a

payment is required to be made or the payment received is the entire

amount to which the trustee is entitled, the trustee shall allocate

the entire payment to principal. For purposes of this subsection, a

payment is not "required to be made" to the extent that it is made

because the trustee exercises a right of withdrawal.

D. Except as otherwise provided in subsection E of this

section, subsections F and G of this section apply, and subsections

B and C of this section do not apply in determining the allocation

of a payment made from a separate fund to:

1. A trust to which an election to qualify for a marital

deduction under Section 2056(b)(7) of the Internal Revenue Code of

1986, as amended, has been made; or

2. A trust that qualifies for the marital deduction under

Section 2056(b)(5) of the Internal Revenue Code of 1986, as amended.

E. Subsections D, F, and G of this section do not apply if and

to the extent that the series of payments would, without the

application of subsection D of this section, qualify for the marital

deduction under Section 2056(b)(7)(C) of the Internal Revenue Code

of 1986, as amended.

F. A trustee shall determine the internal income of each

separate fund for the accounting period as if the separate fund were

a trust subject to the Oklahoma Uniform Principal and Income Act.

Upon request of the surviving spouse, the trustee shall demand that

the person administering the separate fund distribute the internal

income to the trust. The trustee shall allocate a payment from the

separate fund to income to the extent of the internal income of the

separate fund and distribute that amount to the surviving spouse.

The trustee shall allocate the balance of the payment to principal.

Upon request of the surviving spouse, the trustee shall allocate

principal to income to the extent the internal income of the

separate fund exceeds payments made from the separate fund to the

trust during the accounting period.

G. If a trustee cannot determine the internal income of a

separate fund but can determine the value of the separate fund, the

internal income of the separate fund shall be an amount of not less

than three percent (3%) or more than four percent (4%) of the fund’s

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value, as determined annually by the trustee in a manner that

fulfills the trustee's duty of impartiality between the income and
l income of a

separate fund but can determine the value of the separate fund, the

internal income of the separate fund shall be an amount of not less

than three percent (3%) or more than four percent (4%) of the fund’s

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value, as determined annually by the trustee in a manner that

fulfills the trustee's duty of impartiality between the income and

remainder beneficiaries, according to the most recent statement of

value preceding the beginning of the accounting period. If the

trustee can determine neither the internal income of the separate

fund nor the fund’s value, the internal income of the fund is deemed

to equal the product of the interest rate and the present value of

the expected future payments, as determined under Section 7520 of

the Internal Revenue Code of 1986, as amended, for the month

preceding the accounting period for which the computation is made.

H. This section does not apply to a payment to which Section

175.410 of this title applies.