Section 19-3A-415

Asset-backed securities.

(a) In this section, "asset-backed security" means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financial assets that provide collateral for the security. The term includes an asset that gives the owner the right to receive from the collateral financial assets (1) only the interest or other current return thereon or (2) only the proceeds other than interest or current return. The term does not include an asset to which Section 19-3A-401 or Section 19-3A-409 applies.

(b) If a trust receives a payment that includes interest or other current return and other proceeds of the collateral financial assets, then the fiduciary (1) shall allocate to income the portion of the payment which the payer identifies as being from interest or other current return; and (2) shall allocate the balance of the payment to principal.

(c) If a trust receives one or more payments in exchange for the trust's entire interest in an asset-backed security within a 12-month period, then the fiduciary shall allocate the payments to principal. If a payment is one of a series of payments that will result in the liquidation of the trust's interest in the security within a period exceeding 12 months, then the fiduciary shall allocate ten percent (10%) of the payment to income and the balance to principal.

(Act 2000-675, p. 1343, §1.)