(a) In this section, “derivative” means a contract or financial instrument or a combination of contracts and financial instruments which gives a trust the right or obligation to participate in some or all changes in the price of a tangible or intangible asset or group of assets, or changes in a rate, an index of prices or rates, or other market indicator for an asset or a group of assets.
(b) To the extent that a trustee does not account under § 15-510 of this subtitle for transactions in derivatives, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions.
(c) (1) If a trustee grants an option to buy property from the trust, whether or not the trust owns the property when the option is granted, grants an option that permits another person to sell property to the trust, or acquires an option to buy property for the trust or an option to sell an asset owned by the trust, and the trustee or other owner of the asset is required to deliver the asset if the option is exercised, an amount received for granting the option shall be allocated to principal.
(2) An amount paid to acquire the option shall be paid from principal.
(3) A gain or loss realized on the exercise of an option, including an option granted to a settlor of the trust for services rendered, shall be allocated to principal.
Structure Maryland Statutes
Subtitle 5 - Maryland Uniform Principal and Income Act
Part IV - Allocation of Receipts During Administration of Trust
Section 15-508 - Character of Receipts
Section 15-509 - Distribution From Trust or Estate
Section 15-510 - Separate Accounting Methods in Business and Other Activities Conducted by Trustee
Section 15-511 - Principal Receipts
Section 15-512 - Rental Property
Section 15-513 - Obligation to Pay Money
Section 15-514 - Insurance Policies and Similar Contracts
Section 15-515 - Insubstantial Allocations Not Required
Section 15-516 - Deferred Compensation, Annuities, and Similar Payments
Section 15-517 - Liquidating Asset
Section 15-518 - Minerals, Water, and Other Natural Resources
Section 15-520 - Property Not Productive of Income