Bill Text: NY S05801 | 2011-2012 | General Assembly | Introduced
Bill Title: Relates to the exercise of a power of appointment and an authorized trustee's authority to invade trust principal.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-06-23 - SUBSTITUTED BY A8297A [S05801 Detail]
Download: New_York-2011-S05801-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
5801
2011-2012 Regular Sessions
I N S E N A T E
June 17, 2011
___________
Introduced by Sen. BONACIC -- (at request of the Office of Court Admin-
istration) -- read twice and ordered printed, and when printed to be
committed to the Committee on Rules
AN ACT to amend the estates, powers and trusts law, in relation to the
exercise of a power of appointment and an authorized trustee's author-
ity to invade trust principal; and to repeal certain provisions of
such law relating thereto
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Paragraphs (b), (c), (d), (e), (f) and (g) of section
2 10-6.6 of the estates, powers and trusts law are REPEALED.
3 S 2. Section 10-6.6 of the estates, powers and trusts law is amended
4 by adding eighteen new paragraphs (b), (c), (d), (e), (f), (g), (h),
5 (i), (j), (k), (l), (m), (n), (o), (p), (q), (r) and (s) to read as
6 follows:
7 (B) AN AUTHORIZED TRUSTEE WITH UNLIMITED DISCRETION TO INVADE TRUST
8 PRINCIPAL MAY APPOINT PART OR ALL OF SUCH PRINCIPAL TO A TRUSTEE OF AN
9 APPOINTED TRUST FOR, AND ONLY FOR THE BENEFIT OF, ONE, MORE THAN ONE OR
10 ALL OF THE CURRENT BENEFICIARIES OF THE INVADED TRUST (TO THE EXCLUSION
11 OF ANY ONE OR MORE OF SUCH CURRENT BENEFICIARIES). THE SUCCESSOR AND
12 REMAINDER BENEFICIARIES OF SUCH APPOINTED TRUST SHALL BE ONE, MORE THAN
13 ONE OR ALL OF THE SUCCESSOR AND REMAINDER BENEFICIARIES OF SUCH INVADED
14 TRUST (TO THE EXCLUSION OF ANY ONE OR MORE OF SUCH SUCCESSOR AND REMAIN-
15 DER BENEFICIARIES).
16 (1) AN AUTHORIZED TRUSTEE EXERCISING THE POWER UNDER THIS PARAGRAPH
17 MAY GRANT A DISCRETIONARY POWER OF APPOINTMENT AS DEFINED IN PARAGRAPH
18 (C) OF SECTION 10-3.4 OF THIS ARTICLE (INCLUDING A PRESENTLY EXERCISABLE
19 POWER OF APPOINTMENT) IN THE APPOINTED TRUST TO ONE OR MORE OF THE
20 CURRENT BENEFICIARIES OF THE INVADED TRUST, PROVIDED THAT THE BENEFICI-
21 ARY GRANTED A POWER TO APPOINT COULD RECEIVE THE PRINCIPAL OUTRIGHT
22 UNDER THE TERMS OF THE INVADED TRUST.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD13047-03-1
S. 5801 2
1 (2) IF THE AUTHORIZED TRUSTEE GRANTS A POWER OF APPOINTMENT UNDER
2 SUBPARAGRAPH (L) OF THIS PARAGRAPH, EXCEPT AS OTHERWISE PROVIDED IN
3 SUBPARAGRAPH (3) OF THIS PARAGRAPH, THE GRANTED POWER MAY ONLY EXCLUDE
4 AS PERMISSIBLE APPOINTEES ONE OR MORE OF THE BENEFICIARY, THE CREATOR,
5 OR THE CREATOR'S SPOUSE, OR ANY OF THE ESTATES, CREDITORS, OR CREDITORS
6 OF THE ESTATES OF THE BENEFICIARY, THE CREATOR OR THE CREATOR'S SPOUSE.
7 (3) IF THE AUTHORIZED TRUSTEE EXERCISES THE POWER UNDER THIS PARA-
8 GRAPH, THE APPOINTED TRUST MAY GRANT ANY POWER OF APPOINTMENT INCLUDED
9 IN THE INVADED TRUST PROVIDED SUCH POWER HAS THE SAME CLASS OF PERMISSI-
10 BLE APPOINTEES AS THE POWER OF APPOINTMENT IN THE INVADED TRUST AND IS
11 EXERCISABLE IN THE SAME FASHION AS THE POWER OF APPOINTMENT IN THE
12 INVADED TRUST.
13 (4) IF THE BENEFICIARY OR BENEFICIARIES OF THE INVADED TRUST ARE
14 DESCRIBED BY A CLASS, THE BENEFICIARY OR BENEFICIARIES OF THE APPOINTED
15 TRUST MAY INCLUDE PRESENT OR FUTURE MEMBERS OF SUCH CLASS.
16 (C) AN AUTHORIZED TRUSTEE WITH THE POWER TO INVADE TRUST PRINCIPAL BUT
17 WITHOUT UNLIMITED DISCRETION MAY APPOINT PART OR ALL OF THE PRINCIPAL OF
18 THE TRUST TO A TRUSTEE OF AN APPOINTED TRUST, PROVIDED THAT THE CURRENT
19 BENEFICIARIES OF THE APPOINTED TRUST SHALL BE THE SAME AS THE CURRENT
20 BENEFICIARIES OF THE INVADED TRUST AND THE SUCCESSOR AND REMAINDER BENE-
21 FICIARIES OF THE APPOINTED TRUST SHALL BE THE SAME AS THE SUCCESSOR AND
22 REMAINDER BENEFICIARIES OF THE INVADED TRUST.
23 (1) IF THE AUTHORIZED TRUSTEE EXERCISES THE POWER UNDER THIS PARA-
24 GRAPH, THE APPOINTED TRUST SHALL INCLUDE THE SAME LANGUAGE AUTHORIZING
25 THE TRUSTEE TO DISTRIBUTE THE INCOME OR INVADE THE PRINCIPAL OF THE
26 APPOINTED TRUST AS IN THE INVADED TRUST.
27 (2) IF THE AUTHORIZED TRUSTEE EXERCISES THE POWER UNDER THIS PARAGRAPH
28 TO EXTEND THE TERM OF THE APPOINTED TRUST BEYOND THE TERM OF THE INVADED
29 TRUST, FOR ANY PERIOD AFTER THE INVADED TRUST WOULD HAVE OTHERWISE
30 TERMINATED UNDER THE PROVISIONS OF THE INVADED TRUST, THE APPOINTED
31 TRUST, IN ADDITION TO THE LANGUAGE REQUIRED TO BE INCLUDED IN THE
32 APPOINTED TRUST PURSUANT TO SUBPARAGRAPH (1) OF THIS PARAGRAPH, MAY ALSO
33 INCLUDE LANGUAGE PROVIDING THE TRUSTEES WITH UNLIMITED DISCRETION TO
34 INVADE THE PRINCIPAL OF THE APPOINTED TRUST DURING SUCH EXTENDED TERM.
35 (3) IF THE BENEFICIARY OR BENEFICIARIES OF THE INVADED TRUST ARE
36 DESCRIBED BY A CLASS, THE BENEFICIARY OR BENEFICIARIES OF THE APPOINTED
37 TRUST SHALL INCLUDE PRESENT OR FUTURE MEMBERS OF SUCH CLASS.
38 (4) IF THE AUTHORIZED TRUSTEE EXERCISES THE POWER UNDER THIS PARAGRAPH
39 AND IF THE INVADED TRUST GRANTS A POWER OF APPOINTMENT TO A BENEFICIARY
40 OF THE TRUST, THE APPOINTED TRUST SHALL GRANT SUCH POWER OF APPOINTMENT
41 IN THE APPOINTED TRUST AND THE CLASS OF PERMISSIBLE APPOINTEES SHALL BE
42 THE SAME AS IN THE INVADED TRUST.
43 (D) AN EXERCISE OF THE POWER TO INVADE TRUST PRINCIPAL UNDER PARA-
44 GRAPHS (B) AND (C) OF THIS SECTION SHALL BE CONSIDERED THE EXERCISE OF A
45 SPECIAL POWER OF APPOINTMENT AS DEFINED IN SECTION 10-3.2 OF THIS ARTI-
46 CLE.
47 (E) THE APPOINTED TRUST TO WHICH AN AUTHORIZED TRUSTEE APPOINTS THE
48 ASSETS OF THE INVADED TRUST MAY HAVE A TERM THAT IS LONGER THAN THE TERM
49 SET FORTH IN THE INVADED TRUST, INCLUDING, BUT NOT LIMITED TO, A TERM
50 MEASURED BY THE LIFETIME OF A CURRENT BENEFICIARY.
51 (F) IF AN AUTHORIZED TRUSTEE HAS UNLIMITED DISCRETION TO INVADE THE
52 PRINCIPAL OF A TRUST AND THE SAME TRUSTEE OR ANOTHER TRUSTEE HAS THE
53 POWER TO INVADE PRINCIPAL UNDER THE TRUST INSTRUMENT WHICH POWER IS NOT
54 SUBJECT TO UNLIMITED DISCRETION, SUCH AUTHORIZED TRUSTEE HAVING UNLIMIT-
55 ED DISCRETION MAY EXERCISE THE POWER OF APPOINTMENT UNDER PARAGRAPH (B)
56 OF THIS SECTION.
S. 5801 3
1 (G) AN AUTHORIZED TRUSTEE MAY EXERCISE THE POWER TO APPOINT IN FAVOR
2 OF AN APPOINTED TRUST UNDER PARAGRAPHS (B) AND (C) OF THIS SECTION
3 WHETHER OR NOT THERE IS A CURRENT NEED TO INVADE PRINCIPAL UNDER THE
4 TERMS OF THE INVADED TRUST.
5 (H) AN AUTHORIZED TRUSTEE EXERCISING THE POWER UNDER THIS SECTION HAS
6 A FIDUCIARY DUTY TO EXERCISE THE POWER IN THE BEST INTERESTS OF ONE OR
7 MORE PROPER OBJECTS OF THE EXERCISE OF THE POWER AND AS A PRUDENT PERSON
8 WOULD EXERCISE THE POWER UNDER THE PREVAILING CIRCUMSTANCES. THE AUTHOR-
9 IZED TRUSTEE MAY NOT EXERCISE THE POWER UNDER THIS SECTION IF THERE IS
10 SUBSTANTIAL EVIDENCE OF A CONTRARY INTENT OF THE CREATOR AND IT CANNOT
11 BE ESTABLISHED THAT THE CREATOR WOULD BE LIKELY TO HAVE CHANGED SUCH
12 INTENTION UNDER THE CIRCUMSTANCES EXISTING AT THE TIME OF THE EXERCISE
13 OF THE POWER. THE PROVISIONS OF THE INVADED TRUST ALONE ARE NOT TO BE
14 VIEWED AS SUBSTANTIAL EVIDENCE OF A CONTRARY INTENT OF THE CREATOR
15 UNLESS THE INVADED TRUST EXPRESSLY PROHIBITS THE EXERCISE OF THE POWER
16 IN THE MANNER INTENDED BY THE AUTHORIZED TRUSTEE.
17 (I) UNLESS THE AUTHORIZED TRUSTEE PROVIDES OTHERWISE:
18 (1) THE APPOINTMENT OF ALL OF THE ASSETS COMPRISING THE PRINCIPAL OF
19 THE INVADED TRUST TO AN APPOINTED TRUST SHALL INCLUDE SUBSEQUENTLY
20 DISCOVERED ASSETS OF THE INVADED TRUST AND UNDISTRIBUTED PRINCIPAL OF
21 THE INVADED TRUST ACQUIRED AFTER THE APPOINTMENT TO THE APPOINTED TRUST;
22 AND
23 (2) THE APPOINTMENT OF PART BUT NOT ALL OF THE ASSETS COMPRISING THE
24 PRINCIPAL OF THE INVADED TRUST TO AN APPOINTED TRUST SHALL NOT INCLUDE
25 SUBSEQUENTLY DISCOVERED ASSETS BELONGING TO THE INVADED TRUST AND PRIN-
26 CIPAL PAID TO OR ACQUIRED BY THE INVADED TRUST AFTER THE APPOINTMENT TO
27 THE APPOINTED TRUST; SUCH ASSETS SHALL REMAIN THE ASSETS OF THE INVADED
28 TRUST.
29 (J) THE EXERCISE OF THE POWER TO APPOINT TO AN APPOINTED TRUST UNDER
30 PARAGRAPH (B) OR (C) OF THIS SECTION SHALL BE EVIDENCED BY AN INSTRUMENT
31 IN WRITING, SIGNED, DATED AND ACKNOWLEDGED BY THE AUTHORIZED TRUSTEE.
32 THE EXERCISE OF THE POWER SHALL BE EFFECTIVE THIRTY DAYS AFTER THE DATE
33 OF SERVICE OF THE INSTRUMENT AS SPECIFIED IN SUBPARAGRAPH (2) OF THIS
34 PARAGRAPH, UNLESS THE PERSONS ENTITLED TO NOTICE CONSENT IN WRITING TO A
35 SOONER EFFECTIVE DATE.
36 (1) AN AUTHORIZED TRUSTEE MAY EXERCISE THE POWER AUTHORIZED BY PARA-
37 GRAPHS (B) AND (C) OF THIS SECTION WITHOUT THE CONSENT OF THE CREATOR,
38 OR OF THE PERSONS INTERESTED IN THE INVADED TRUST, AND WITHOUT COURT
39 APPROVAL, PROVIDED THAT THE AUTHORIZED TRUSTEE MAY SEEK COURT APPROVAL
40 FOR THE EXERCISE WITH NOTICE TO ALL PERSONS INTERESTED IN THE INVADED
41 TRUST.
42 (2) A COPY OF THE INSTRUMENT EXERCISING THE POWER AND A COPY OF EACH
43 OF THE INVADED TRUST AND THE APPOINTED TRUST SHALL BE DELIVERED (A) TO
44 THE CREATOR, IF LIVING, OF THE INVADED TRUST, (B) TO ANY PERSON HAVING
45 THE RIGHT, PURSUANT TO THE TERMS OF THE INVADED TRUST, TO REMOVE OR
46 REPLACE THE AUTHORIZED TRUSTEE EXERCISING THE POWER UNDER PARAGRAPH (B)
47 OR (C) OF THIS SECTION, AND (C) TO ANY PERSONS INTERESTED IN THE INVADED
48 TRUST AND THE APPOINTED TRUST (OR, IN THE CASE OF ANY PERSONS INTERESTED
49 IN THE TRUST, TO ANY GUARDIAN OF THE PROPERTY, CONSERVATOR OR PERSONAL
50 REPRESENTATIVE OF ANY SUCH PERSON OR THE PARENT OR PERSON WITH WHOM ANY
51 SUCH MINOR PERSON RESIDES), BY REGISTERED OR CERTIFIED MAIL, RETURN
52 RECEIPT REQUESTED, OR BY PERSONAL DELIVERY OR IN ANY OTHER MANNER
53 DIRECTED BY THE COURT HAVING JURISDICTION OVER THE INVADED TRUST.
54 (3) THE INSTRUMENT EXERCISING THE POWER SHALL STATE WHETHER THE
55 APPOINTMENT IS OF ALL THE ASSETS COMPRISING THE PRINCIPAL OF THE INVADED
56 TRUST OR A PART BUT NOT ALL THE ASSETS COMPRISING THE PRINCIPAL OF THE
S. 5801 4
1 INVADED TRUST AND IF A PART, THE APPROXIMATE PERCENTAGE OF THE VALUE OF
2 THE PRINCIPAL OF THE INVADED TRUST THAT IS THE SUBJECT OF THE APPOINT-
3 MENT.
4 (4) A PERSON INTERESTED IN THE INVADED TRUST MAY OBJECT TO THE TRUS-
5 TEE'S EXERCISE OF THE POWER UNDER THIS SECTION BY SERVING A WRITTEN
6 NOTICE OF OBJECTION UPON THE TRUSTEE PRIOR TO THE EFFECTIVE DATE OF THE
7 EXERCISE OF THE POWER. THE FAILURE TO OBJECT SHALL NOT CONSTITUTE A
8 CONSENT.
9 (5) THE RECEIPT OF A COPY OF THE INSTRUMENT EXERCISING THE POWER SHALL
10 NOT AFFECT THE RIGHT OF ANY PERSON INTERESTED IN THE INVADED TRUST TO
11 COMPEL THE AUTHORIZED TRUSTEE WHO EXERCISED THE POWER OF APPOINTMENT
12 PURSUANT TO PARAGRAPH (B) OR (C) OF THIS SECTION TO ACCOUNT FOR SUCH
13 EXERCISE AND SHALL NOT FORECLOSE ANY SUCH INTERESTED PERSON FROM OBJECT-
14 ING TO AN ACCOUNT OR COMPELLING A TRUSTEE TO ACCOUNT.
15 (6) A COPY OF THE INSTRUMENT EXERCISING THE POWER SHALL BE KEPT WITH
16 THE RECORDS OF THE INVADED TRUST AND THE ORIGINAL SHALL BE FILED IN THE
17 COURT HAVING JURISDICTION OVER THE INVADED TRUST. WHERE A TRUSTEE OF AN
18 INTER VIVOS TRUST EXERCISES THE POWER AND THE TRUST HAS NOT BEEN THE
19 SUBJECT OF A PROCEEDING IN THE SURROGATE'S COURT, NO FILING IS REQUIRED.
20 (K) THIS SECTION SHALL NOT BE CONSTRUED TO ABRIDGE THE RIGHT OF ANY
21 TRUSTEE TO APPOINT PROPERTY IN FURTHER TRUST THAT ARISES UNDER THE TERMS
22 OF THE GOVERNING INSTRUMENT OF A TRUST OR UNDER ANY OTHER PROVISION OF
23 LAW OR UNDER COMMON LAW, OR AS DIRECTED BY ANY COURT HAVING JURISDICTION
24 OVER THE TRUST.
25 (1) NOTHING IN THIS SECTION IS INTENDED TO CREATE OR IMPLY A DUTY TO
26 EXERCISE A POWER TO INVADE PRINCIPAL, AND NO INFERENCE OF IMPROPRIETY
27 SHALL BE MADE AS A RESULT OF AN AUTHORIZED TRUSTEE NOT EXERCISING THE
28 POWER CONFERRED UNDER PARAGRAPH (B) OR (C) OF THIS SECTION.
29 (M) A POWER AUTHORIZED BY PARAGRAPH (B) OR (C) OF THIS SECTION MAY BE
30 EXERCISED, SUBJECT TO THE PROVISIONS OF PARAGRAPH (H) OF THIS SECTION,
31 UNLESS EXPRESSLY PROHIBITED BY THE TERMS OF THE GOVERNING INSTRUMENT,
32 BUT A GENERAL PROHIBITION OF THE AMENDMENT OR REVOCATION OF THE INVADED
33 TRUST OR A PROVISION THAT CONSTITUTES A SPENDTHRIFT CLAUSE SHALL NOT
34 PRECLUDE THE EXERCISE OF A POWER UNDER PARAGRAPH (B) OR (C) OF THIS
35 SECTION.
36 (N) AN AUTHORIZED TRUSTEE MAY NOT EXERCISE A POWER AUTHORIZED BY PARA-
37 GRAPH (B) OR (C) OF THIS SECTION TO EFFECT ANY OF THE FOLLOWING:
38 (1) TO REDUCE, LIMIT OR MODIFY ANY BENEFICIARY'S CURRENT RIGHT TO A
39 MANDATORY DISTRIBUTION OF INCOME OR PRINCIPAL, A MANDATORY ANNUITY OR
40 UNITRUST INTEREST, A RIGHT TO WITHDRAW A PERCENTAGE OF THE VALUE OF THE
41 TRUST OR A RIGHT TO WITHDRAW A SPECIFIED DOLLAR AMOUNT, PROVIDED THAT
42 SUCH MANDATORY RIGHT HAS COME INTO EFFECT WITH RESPECT TO THE BENEFICI-
43 ARY. NOTWITHSTANDING THE FOREGOING, BUT SUBJECT TO THE OTHER LIMITATIONS
44 IN THIS SECTION, AN AUTHORIZED TRUSTEE MAY EXERCISE A POWER AUTHORIZED
45 BY PARAGRAPH (B) OR (C) OF THIS SECTION TO APPOINT TO AN APPOINTED TRUST
46 THAT IS A SUPPLEMENTAL NEEDS TRUST THAT CONFORMS TO THE PROVISIONS OF
47 SECTION 7-1.12 OF THIS CHAPTER;
48 (2) TO DECREASE OR INDEMNIFY AGAINST A TRUSTEE'S LIABILITY OR EXONER-
49 ATE A TRUSTEE FROM LIABILITY FOR FAILURE TO EXERCISE REASONABLE CARE,
50 DILIGENCE AND PRUDENCE;
51 (3) TO ELIMINATE A PROVISION GRANTING ANOTHER PERSON THE RIGHT TO
52 REMOVE OR REPLACE THE AUTHORIZED TRUSTEE EXERCISING THE POWER UNDER
53 PARAGRAPH (B) OR (C) OF THIS SECTION UNLESS A COURT HAVING JURISDICTION
54 OVER THE TRUST SPECIFIES OTHERWISE;
55 (4) TO MAKE A BINDING AND CONCLUSIVE FIXATION OF THE VALUE OF ANY
56 ASSET FOR PURPOSES OF DISTRIBUTION, ALLOCATION OR OTHERWISE; OR
S. 5801 5
1 (5) TO JEOPARDIZE (A) THE DEDUCTION OR EXCLUSION ORIGINALLY CLAIMED
2 WITH RESPECT TO ANY CONTRIBUTION TO THE INVADED TRUST THAT QUALIFIED FOR
3 THE ANNUAL EXCLUSION UNDER SECTION 2503(B) OF THE INTERNAL REVENUE CODE,
4 THE MARITAL DEDUCTION UNDER SECTION 2056(A) OR 2523(A) OF THE INTERNAL
5 REVENUE CODE, OR THE CHARITABLE DEDUCTION UNDER SECTION 170(A), 642(C),
6 2055(A) OR 2522(A) OF THE INTERNAL REVENUE CODE, (B) THE QUALIFICATION
7 OF A TRANSFER AS A DIRECT SKIP UNDER SECTION 2642(C) OF THE INTERNAL
8 REVENUE CODE, OR (C) ANY OTHER SPECIFIC TAX BENEFIT FOR WHICH A CONTRIB-
9 UTION ORIGINALLY QUALIFIED FOR INCOME, GIFT, ESTATE, OR GENERATION-SKIP-
10 PING TRANSFER TAX PURPOSES UNDER THE INTERNAL REVENUE CODE.
11 (O) AN AUTHORIZED TRUSTEE SHALL CONSIDER THE TAX IMPLICATIONS OF THE
12 EXERCISE OF THE POWER UNDER PARAGRAPH (B) OR (C) OF THIS SECTION.
13 (P) AN AUTHORIZED TRUSTEE MAY NOT EXERCISE A POWER DESCRIBED IN PARA-
14 GRAPH (B) OR (C) OF THIS SECTION IN VIOLATION OF THE LIMITATIONS UNDER
15 SECTIONS 9-1.1, 10-8.1 AND 10-8.2 OF THIS CHAPTER, AND ANY SUCH EXERCISE
16 SHALL VOID THE ENTIRE EXERCISE OF SUCH POWER.
17 (Q)(1) UNLESS A COURT OTHERWISE DIRECTS, AN AUTHORIZED TRUSTEE MAY NOT
18 EXERCISE A POWER AUTHORIZED BY PARAGRAPH (B) OR (C) OF THIS SECTION TO
19 CHANGE THE PROVISIONS REGARDING THE DETERMINATION OF THE COMPENSATION OF
20 ANY TRUSTEE; THE COMMISSIONS OR OTHER COMPENSATION PAYABLE TO THE TRUS-
21 TEES OF THE INVADED TRUST MAY CONTINUE TO BE PAID TO THE TRUSTEES OF THE
22 APPOINTED TRUST DURING THE TERM OF THE APPOINTED TRUST AND SHALL BE
23 DETERMINED IN THE SAME MANNER AS IN THE INVADED TRUST.
24 (2) NO TRUSTEE SHALL RECEIVE ANY PAYING COMMISSION OR OTHER COMPEN-
25 SATION FOR APPOINTING OF PROPERTY FROM THE INVADED TRUST TO AN APPOINTED
26 TRUST PURSUANT TO PARAGRAPH (B) OR (C) OF THIS SECTION.
27 (R) UNLESS THE INVADED TRUST EXPRESSLY PROVIDES OTHERWISE, THIS
28 SECTION APPLIES TO:
29 (1) ANY TRUST GOVERNED BY THE LAWS OF THIS STATE, INCLUDING A TRUST
30 WHOSE GOVERNING LAW HAS BEEN CHANGED TO THE LAWS OF THIS STATE; AND
31 (2) ANY TRUST THAT HAS A TRUSTEE WHO IS AN INDIVIDUAL DOMICILED IN
32 THIS STATE OR A TRUSTEE WHICH IS AN ENTITY HAVING AN OFFICE IN THIS
33 STATE, PROVIDED THAT A MAJORITY OF THE TRUSTEES SELECT THIS STATE AS THE
34 LOCATION FOR THE PRIMARY ADMINISTRATION OF THE TRUST BY AN INSTRUMENT IN
35 WRITING, SIGNED AND ACKNOWLEDGED BY A MAJORITY OF THE TRUSTEES. THE
36 INSTRUMENT EXERCISING THIS SELECTION SHALL BE KEPT WITH THE RECORDS OF
37 THE INVADED TRUST.
38 (S) FOR PURPOSES OF THIS SECTION:
39 (1) THE TERM "APPOINTED TRUST" MEANS AN IRREVOCABLE TRUST WHICH
40 RECEIVES PRINCIPAL FROM AN INVADED TRUST UNDER PARAGRAPH (B) OR (C) OF
41 THIS SECTION INCLUDING A NEW TRUST CREATED BY THE CREATOR OF THE INVADED
42 TRUST OR BY THE TRUSTEES, IN THAT CAPACITY, OF THE INVADED TRUST. FOR
43 PURPOSES OF CREATING THE NEW TRUST, THE REQUIREMENT OF SECTION 7-1.17 OF
44 THIS CHAPTER THAT THE INSTRUMENT BE SIGNED BY THE CREATOR SHALL BE
45 DEEMED SATISFIED BY THE SIGNATURE OF THE TRUSTEE OF THE APPOINTED TRUST.
46 (2) THE TERM "AUTHORIZED TRUSTEE" MEANS, AS TO AN INVADED TRUST, ANY
47 TRUSTEE OR TRUSTEES WITH AUTHORITY TO PAY TRUST PRINCIPAL TO OR FOR ONE
48 OR MORE CURRENT BENEFICIARIES OTHER THAN (I) THE CREATOR, OR (II) A
49 BENEFICIARY TO WHOM INCOME OR PRINCIPAL MUST BE PAID CURRENTLY OR IN THE
50 FUTURE, OR WHO IS OR WILL BECOME ELIGIBLE TO RECEIVE A DISTRIBUTION OF
51 INCOME OR PRINCIPAL IN THE DISCRETION OF THE TRUSTEE (OTHER THAN BY THE
52 EXERCISE OF A POWER OF APPOINTMENT HELD IN A NON-FIDUCIARY CAPACITY).
53 (3) REFERENCES TO SECTIONS OF THE "INTERNAL REVENUE CODE" REFER TO THE
54 UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED FROM TIME TO
55 TIME, OR TO CORRESPONDING PROVISIONS OF SUBSEQUENT INTERNAL REVENUE
56 LAWS, AND ALSO REFER TO CORRESPONDING PROVISIONS OF STATE LAW.
S. 5801 6
1 (4) THE TERM "CURRENT BENEFICIARY OR BENEFICIARIES" MEANS THE PERSON
2 OR PERSONS (OR AS TO A CLASS, ANY PERSON OR PERSONS WHO ARE OR WILL
3 BECOME MEMBERS OF SUCH CLASS) TO WHOM THE TRUSTEES MAY DISTRIBUTE PRIN-
4 CIPAL AT THE TIME OF THE EXERCISE OF THE POWER.
5 (5) THE TERM "INVADE" SHALL MEAN THE POWER TO PAY DIRECTLY TO THE
6 BENEFICIARY OF A TRUST OR MAKE APPLICATION FOR THE BENEFIT OF THE BENE-
7 FICIARY.
8 (6) THE TERM "INVADED TRUST" MEANS ANY EXISTING IRREVOCABLE INTER
9 VIVOS OR TESTAMENTARY TRUST WHOSE PRINCIPAL IS APPOINTED UNDER PARAGRAPH
10 (B) OR (C) OF THIS SECTION.
11 (7) THE TERM "PERSON OR PERSONS INTERESTED IN THE INVADED TRUST" SHALL
12 MEAN ANY PERSON OR PERSONS UPON WHOM SERVICE OF PROCESS WOULD BE
13 REQUIRED IN A PROCEEDING FOR THE JUDICIAL SETTLEMENT OF THE ACCOUNT OF
14 THE TRUSTEE, TAKING INTO ACCOUNT SECTION THREE HUNDRED FIFTEEN OF THE
15 SURROGATE'S COURT PROCEDURE ACT.
16 (8) THE TERM "PRINCIPAL" SHALL INCLUDE THE INCOME OF THE TRUST AT THE
17 TIME OF THE EXERCISE OF THE POWER THAT IS NOT CURRENTLY REQUIRED TO BE
18 DISTRIBUTED, INCLUDING ACCRUED AND ACCUMULATED INCOME.
19 (9) THE TERM "UNLIMITED DISCRETION" MEANS THE UNLIMITED RIGHT TO
20 DISTRIBUTE PRINCIPAL THAT IS NOT MODIFIED IN ANY MANNER. A POWER TO PAY
21 PRINCIPAL THAT INCLUDES WORDS SUCH AS BEST INTERESTS, WELFARE, COMFORT,
22 OR HAPPINESS SHALL NOT BE CONSIDERED A LIMITATION OR MODIFICATION OF THE
23 RIGHT TO DISTRIBUTE PRINCIPAL.
24 S 3. This act shall take effect immediately and shall apply to trusts
25 whether created prior to or after such effective date.
