1. A trustee of a unitrust may, in the trustees discretion, determine: (a) The effective date of a conversion to a unitrust; (b) The provisions for prorating a unitrust distribution for a beneficiary whose right to payments commences or ceases during a calendar year; (c) The frequency of unitrust distributions during a calendar year; (d) The effect of other payments from or contributions to the trust on the trusts value; (e) How frequently to value nonliquid assets and whether to estimate the value of nonliquid assets; (f) Whether to omit from the calculations of the trust property occupied or possessed by a beneficiary; and (g) Any other matters necessary for the proper functioning of the unitrust. 2. Expenses which would be deducted from income if the trust were not a unitrust may not be deducted from the unitrust distribution. Unless otherwise provided by the trust instrument, the unitrust distribution must be paid from income. To the extent income is insufficient to pay a distribution, the distribution must be paid from realized short-term capital gains. To the extent income and realized short-term capital gains are insufficient, the distribution must be paid from realized long-term capital gains. To the extent none of these funds are sufficient, the distribution must be paid from the principal of the trust.
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