Indiana § 30-4-10-41 - Exercise of decanting power and distributive discretion; limitations; general or nongeneral appointment

§ 30-4-10-41. Exercise of decanting power and distributive discretion; limitations; general or nongeneral appointment

Sec. 41. (a) As used in this section, "noncontingent right" means a right that is not subject to the:

(1) exercise of discretion; or

(2) occurrence of a specified event that is not certain to occur.

The term does not include a right held by a beneficiary if any person has discretion to distribute property subject to the right of any person other than the beneficiary or the beneficiary's estate.

(b) As used in this section, "presumptive remainder beneficiary" means a qualified beneficiary other than a current beneficiary.

(c) As used in this section, "successor beneficiary" means a beneficiary that is not a qualified beneficiary on the date the beneficiary's qualification is determined. The term does not include a person that is a beneficiary only because the person holds a nongeneral power of appointment.

(d) As used in this section, "vested interest" means a:

(1) right to a mandatory distribution that is a noncontingent right as of the date of the exercise of the decanting power;

(2) current and noncontingent right, annually or more frequently, to a mandatory distribution of income, a specified dollar amount, or a percentage of value of some or all of the trust property;

(3) current and noncontingent right, annually or more frequently, to withdraw income, a specified dollar amount, or a percentage of value of some or all of the trust property;

(4) presently exercisable general power of appointment; or

(5) right to receive an ascertainable part of the trust property on the trust's termination that is not subject to the exercise of discretion or to the occurrence of a specified event that is not certain to occur.

(e) Subject to subsection (f) and section 44 of this chapter, an authorized fiduciary that has expanded distributive discretion over the principal of a first trust for the benefit of one (1) or more current beneficiaries may exercise the decanting power over the principal of the first trust.

(f) Subject to section 43 of this chapter, an exercise of the decanting power under this section must not:

(1) except as provided in subsection (g), include as a current beneficiary a person that is not a current beneficiary of the first trust;

(2) except as provided in subsection (g), include as a presumptive remainder beneficiary or successor beneficiary a person that is not a current beneficiary, presumptive remainder beneficiary, or successor beneficiary of the first trust; or

(3) reduce or eliminate a vested interest.

(g) Subject to subsection (f)(3) and section 44 of this chapter, in an exercise of the decanting power under this subsection, a second trust may be a trust created or administered under the law of any jurisdiction and may:

(1) retain a power of appointment granted in the first trust;

(2) omit a power of appointment granted in the first trust, other than a presently exercisable general power of appointment;

(3) create or modify a power of appointment if the powerholder is a current beneficiary of the first trust and the authorized fiduciary has expanded distributive discretion to distribute principal to the beneficiary; and

(4) create or modify a power of appointment if the powerholder is a presumptive remainder beneficiary or successor beneficiary of the first trust, but the exercise of the power may take effect only after the powerholder becomes, or would have become a current beneficiary.

(h) A power of appointment described in subsections (g)(1) through (g)(4) may be general or nongeneral. The class of permissible appointees in favor of which the power may be exercised may be broader than or different from the beneficiaries of the first trust.

(i) If an authorized fiduciary has expanded distributive discretion over part of the principal of a first trust, the fiduciary may exercise the decanting power under this section over the principal that the authorized fiduciary has expanded distributive discretion.

As added by P.L.161-2022, SEC.3.