Amends RCW 11.104A, known as the “principal and income act of 2002”to specify the manner in which trustees determine and distribute interest income payments to beneficiaries of a trust. Defines and clarifies different types of, and allocation of interest and principal in various types of trust accounts.   Official Text and Analysis.

To clarify that to determine the internal income of a separate fund with a known value, the trustee must multiply the value by 3 percent.

To require a trustee to calculate the 4% allocation made to income using the most recent statement of value preceding the beginning of the accounting period, in cases where no part of a payment is characterized as interest, a dividend, or an equivalent. Removes the section changing the provisions related to income taxes on receipts from business entities and changes the formula used to calculate the internal income of a separate fund from 3% to 4% of the fund's value, in cases where the trustee cannot determine the internal income of a separate fund but can determine the value of the separate fund.

Amends RCW 11.104A, known as the “principal and income act of 2002” to specify the manner in which trustees determine and distribute interest income payments to beneficiaries of a trust. Defines and clarifies different types of, and allocation of interest and principal in various types of trust accounts. House amendment provides for specific instructions on the 4% calculation made to income.