Maryland § 14-609

§ 14-609.

    (a)    (1)    In this section the following words have the meanings indicated.

        (2)    “Deferred distribution” means a provision in a second trust that defers or postpones, as compared with the first trust, a contingent right of a beneficiary to receive an outright distribution of assets on the attainment of a certain age or the occurrence of a specified event.

        (3)    “Limited distributive discretion” means a discretionary power of distribution that is limited to an ascertainable standard or a reasonably definite standard.

    (b)    An authorized fiduciary who has limited distributive discretion over the principal of a first trust may exercise the decanting power over the principal of the first trust.

    (c)    (1)    Subject to § 14–611 of this subtitle, one or more second trusts may be created or administered under the law of any jurisdiction.

        (2)    The second trusts, in the aggregate, shall grant each beneficiary of the first trust beneficial interests that are substantially similar to the beneficiary’s beneficial interests under the first trust.

        (3)    Notwithstanding paragraph (2) of this subsection, a second trust may:

            (i)    Include a deferred distribution, if the second trust provides that:

                1.    During the lifetime of the beneficiary, no portion of the income or principal attributable to the deferred distribution may be distributed to, or for the benefit of, any person other than the beneficiary; and

                2.    A.    The beneficiary shall have a testamentary qualified power of appointment exercisable in favor of the beneficiary’s estate over the deferred distribution; or

                B.    The deferred distribution shall be payable to the beneficiary’s estate if the second trust does not terminate during the beneficiary’s lifetime;

            (ii)    Expand a power of appointment existing in the first trust to include as permissible appointees the creditors of the powerholder’s estate; or

            (iii)    Narrow a power of appointment existing in the first trust that is not presently exercisable to remove as permissible appointees any of the following:

                1.    The powerholder;

                2.    The powerholder’s estate;

                3.    The creditors of the powerholder; or

                4.    The creditors of the powerholder’s estate.

    (d)    (1)    A power to make a distribution under a second trust for the benefit of a beneficiary who is an individual is substantially similar to a power under the first trust to make a distribution directly to the beneficiary.

        (2)    A distribution is for the benefit of the beneficiary if:

            (i)    The distribution is applied for the benefit of the beneficiary;

            (ii)    1.    The beneficiary is under a legal disability or the trustee reasonably believes the beneficiary is incapacitated; and

                2.    The distribution is made as allowed by this title; or

            (iii)    The distribution is made as allowed under the terms of the first trust instrument and the second trust instrument for the benefit of the beneficiary.

    (e)    If an authorized fiduciary has limited distributive discretion over part of but not all of the principal of a first trust, the authorized fiduciary may exercise the decanting power under this section only over the part of the principal over which the authorized fiduciary has limited distributive discretion.