Tennessee § 35-15-816 - Specific powers of trustee.

§ 35-15-816. Specific powers of trustee.

Any references contained in a will or trust incorporating by reference the powers enumerated in § 35-50-110 as they relate to a trustee will incorporate by reference the powers contained in this section. Unless the terms of the instrument expressly provide otherwise and without limiting the authority conferred by § 35-15-815, a trustee may: Collect trust property and accept or reject additions to the trust property from a settlor or any other person; Acquire or sell property, for cash or on credit, at public or private sale; Exchange, partition, or otherwise change the character of trust property; Deposit trust money in an account in a regulated financial-service institution; Borrow money, with or without security, and mortgage or pledge trust property for a period within or extending beyond the duration of the trust; With respect to an interest in a proprietorship, partnership, limited liability company, business trust, corporation, or other form of business or enterprise, continue the business or other enterprise and take any action that may be taken by shareholders, members, or property owners, including merging, dissolving, or otherwise changing the form of business organization or contributing additional capital; With respect to stocks or other securities, exercise the rights of an absolute owner, including the right to: Vote, or give proxies to vote, with or without power of substitution, or enter into or continue a voting trust agreement; Hold a security in the name of a nominee or in other form without disclosure of the trust so that title may pass by delivery; Pay calls, assessments, and other sums chargeable or accruing against the securities, and sell or exercise stock subscription or conversion rights; and Deposit the securities with a depository or other regulated financial service institution; With respect to an interest in real property, construct, or make ordinary or extraordinary repairs to, alterations to, or improvements in, buildings or other structures, demolish improvements, raze existing or erect new party walls or buildings, subdivide or develop land, dedicate land to public use or grant public or private easements, and make or vacate plats and adjust boundaries; Enter into a lease for any purpose as lessor or lessee, including a lease or other arrangement for exploration and removal of natural resources, with or without the option to purchase or renew, for a period within or extending beyond the duration of the trust; Grant an option involving a sale, lease, or other disposition of trust property or acquire an option for the acquisition of property, including an option exercisable beyond the duration of the trust, and exercise an option so acquired; Insure the property of the trust against damage or loss and insure the trustee, the trustee's agents, and beneficiaries against liability arising from the administration of the trust; Abandon or decline to administer property of no value or of insufficient value to justify its collection or continued administration; With respect to possible liability for violation of environmental law: Inspect or investigate property the trustee holds or has been asked to hold, or property owned or operated by an organization in which the trustee holds or has been asked to hold an interest, for the purpose of determining the application of environmental law with respect to the property; Take action to prevent, abate, or otherwise remedy any actual or potential violation of any environmental law affecting property held directly or indirectly by the trustee, whether taken before or after the assertion of a claim or the initiation of governmental enforcement; Decline to accept property into trust or disclaim any power with respect to property that is or may be burdened with liability for violation of environmental law; Compromise claims against the trust which may be asserted for an alleged violation of environmental law; and Pay the expense of any inspection, review, abatement, or remedial action to comply with environmental law; Pay or contest any claim, settle a claim by or against the trust, and release, in whole or in part, a claim belonging to the trust; Pay taxes, assessments, compensation of the trustee and of employees and agents of the trust, and other expenses incurred in the administration of the trust; Exercise elections with respect to federal, state, and local taxes; Select a mode of payment under any employee benefit or retirement plan, annuity, or life insurance payable to the trustee, exercise rights thereunder, including exercise of the right to indemnification for expenses and against liabilities, and take appropriate action to collect the proceeds; Make loans out of trust property, including loans to a beneficiary on terms and conditions the trustee considers to be fair and reasonable under the circumstances, and the trustee has a lien on future distributions for repayment of those loans; Pledge trust property to guarantee loans made by others to the beneficiary; Appoint a trustee to act in another jurisdiction with respect to trust property located in the other jurisdiction, confer upon the appointed trustee all of the powers and duties of the appointing trustee, require that the appointed trustee furnish security, and remove any trustee so appointed; Pay an amount distributable to a beneficiary who is under a legal disability or who the trustee reasonably believes is incapacitated, by paying it directly to the beneficiary or applying it for the beneficiary's benefit, or by: Paying it to the beneficiary's conservator or, if the beneficiary does not have a conservator, the beneficiary's guardian; Paying it to the beneficiary's custodian under the Uniform Transfers to Minors Act, compiled in title 35, chapter 7, part 2, and, for that purpose, creating a custodianship or custodial trust; If the trustee does not know of a conservator, guardian, custodian, or custodial trustee, paying it to an adult relative or other person having legal or physical care or custody of the beneficiary, to be expended on the beneficiary's behalf; or Managing it as a separate fund on the beneficiary's behalf, subject to the beneficiary's continuing right to withdraw the distribution; On distribution of trust property or the division or termination of a trust, make distributions in divided or undivided interests, allocate particular assets in proportionate or disproportionate shares, value the trust property for those purposes, and adjust for resulting differences in valuation and basis for income tax purposes; Resolve a dispute concerning the interpretation of the trust or its administration by mediation, arbitration, or other procedure for alternative dispute resolution; Prosecute or defend an action, claim, or judicial proceeding in any jurisdiction to protect trust property and the trustee in the performance of the trustee's duties; Sign and deliver contracts and other instruments that are useful to achieve or facilitate the exercise of the trustee's powers; On termination of the trust, exercise the powers appropriate to wind up the administration of the trust and distribute the trust property to the persons entitled to it; and Unless the terms of the instrument expressly provide otherwise: A trustee who has authority, under the terms of a testamentary instrument or irrevocable inter vivos trust agreement, to invade the principal of a trust to make distributions to, or for the benefit of, one or more proper objects of the exercise of the power, may instead exercise such authority by appointing all or part of the principal of the trust in favor of a trustee of a trust under an instrument other than that under which the power to invade is created or under the same instrument; provided, however, that the exercise of such authority: Does not reduce any fixed income interest of any income beneficiary of the trust; and Is in favor of the proper objects of the exercise of the power; The exercise of the power to invade the principal of the trust under subdivision (b)(27)(A) shall be by an instrument in writing, signed and acknowledged by the trustee and filed with the records of the trust; The exercise of the power to invade principal of the trust under subdivision (b)(27)(A) shall not extend the permissible period of the rule against perpetuities that applies to the trust; This section shall not be construed to abridge the right of any trustee who has a power of invasion to appoint property in further trust that arises under any other statute or under common law; The exercise of the power to appoint principal under subdivision (b)(27)(A) shall be considered an exercise of a power of appointment, other than a power to appoint to the trustee, the trustee's creditors, the trustee's estate, or the creditors of the trustee's estate; The second trust: May confer a power of appointment upon a beneficiary of the original trust to whom or for the benefit of whom the trustee has the power to distribute principal of the original trust; The permissible appointees of the power of appointment conferred upon a beneficiary may include persons who are not beneficiaries of the original or second trust; and The power of appointment conferred upon a beneficiary must preclude any exercise that would extend the permissible period of the rule against perpetuities that applies to the trust; If any contribution to the original trust qualified for the annual exclusion under § 2503(b) of the Internal Revenue Code (26 U.S.C. § 2503(b)), the marital deduction under §§ 2056(a) or 2523(a) of the Internal Revenue Code (26 U.S.C. §§ 2506(a) or 2523(a)), or the charitable deduction under §§ 170(a), 642(c), 2055(a) or 2522(a) of the Internal Revenue Code (26 U.S.C. §§ 170(a), 642(c), 2055(a) or 2522(a)), is a direct skip qualifying for treatment under § 2642(c) of the Internal Revenue Code (26 U.S.C. § 2642(c)), or qualified for any other specific tax benefit that would be lost by the existence of the authorized trustee's authority under subdivision (b)(27)(A) for income, gift, estate, or generation-skipping transfer tax purposes under the Internal Revenue Code, then the authorized trustee shall not have the power to distribute the principal of a trust pursuant to subdivision (b)(27)(A) in a manner that would prevent the contribution to the original trust from qualifying for or would reduce the exclusion, deduction, or other tax benefit that was originally claimed with respect to that contribution; During any period when the original trust owns stock in a subchapter S corporation as defined in § 1361(a)(1) of the Internal Revenue Code (26 U.S.C. § 1361(a)(1)), an authorized trustee shall not exercise a power authorized by subdivision (b)(27)(A) to distribute part or all of the stock of the S corporation to a second trust that is not a permitted shareholder under § 1361(c)(2) of the Internal Revenue Code (26 U.S.C. § 1361(c)(2)); This section applies to any trust that is administered in this state; and For purposes of this section, the term “original trust” refers to the trust from which principal is being distributed and the phrase “second trust” refers to the trust to which assets are being distributed from the original trust. Acts 2004, ch. 537, § 74; 2005, ch. 99, § 9; 2013, ch. 390, §§ 37, 38. Compiler's Notes. Acts 2005, ch. 99, § 14 provided that is the intent of the general assembly that, notwithstanding the decision of Arnold v. Davis, 2004 Tenn. App. LEXIS 389 (Tenn. Ct. App. June 17, 2004), the provisions of § 9 of this act reflects existing law, and all trusts entered into prior to this act remain valid and in full effect. Acts 2013, ch. 390, § 55 provided that: (b) Except as otherwise provided in the act, on July 1, 2013: The act applies to all trusts created before, on, or after July 1, 2013; The act applies to all judicial proceedings concerning trusts commenced on or after July 1, 2013; The act applies to judicial proceedings concerning trusts commenced before July 1, 2013, unless the court finds that application of a particular provision of the act would substantially interfere with the effective conduct of the judicial proceedings or prejudice the rights of the parties, in which case the particular provision of the act does not apply and the superseded law applies; Any rule of construction or presumption provided in the act applies to trust instruments executed before July 1, 2013, unless there is a clear and express indication of a contrary intent in the terms of the trust; and An act done before July 1, 2013, is not affected by the act. Law Reviews. Can't Trust a Trust? Decant (Dan W. Holbrook), 40 No. 8 Tenn. B.J. 20 (2004). Where There's a Will: Something Old, Something New, Something Borrowed, Something Blue: Estate Planning Tools Married To New Realities (Eddy R. Smith), 49 Tenn. B.J. 32 (2013). Where There's a Will: The Report of My Practice's Death Was an Exaggeration: The Healthy Prognosis for Estate Planning in Tennessee (Eddy R. Smith), 48 Tenn. B.J. 32 (2012). 1. Arbitration. 2. Capacity of Beneficiaries of Trust. Signature of the trustee of on an investment/brokerage account agreement agreeing to arbitration did not bind the minor beneficiary to conduct arbitration of unknown future disputes or claims because although the plain language of the trust agreement allowed the trustee to agree to arbitrate claims and disputes that had arisen, it did not allow the trustee to agree to arbitration of unknown future disputes or claims. Gladden v. Cumberland Trust & Inv. Co., — S.W.3d —, 2016 Tenn. App. LEXIS 203 (Tenn. Ct. App. Mar. 24, 2016), rev'd, Harvey ex rel. Gladden v. Cumberland Trust & Inv. Co., 532 S.W.3d 243, 2017 Tenn. LEXIS 701 (Tenn. Oct. 20, 2017). Because plaintiffs could not file suit as the beneficiaries of the trust under this statute, their request for leave to amend the complaint to add a second cause of action in which they claimed that the debt at issue was an asset of the decedent's trust was properly denied as plaintiffs still lacked the capacity to file suit. Palmer v. Colvard, — S.W.3d —, 2019 Tenn. App. LEXIS 373 (Tenn. Ct. App. July 31, 2019). Plaintiffs' claims were properly dismissed with prejudice as plaintiffs lacked the capacity to prosecute their complaint because plaintiffs failed to obtain letters testamentary prior to filing suit as the personal representatives of the decedent's estate; and plaintiffs were not entitled to file suit as the beneficiaries of the trust because only the trustee could prosecute or defend an action, claim, or judicial proceeding. Palmer v. Colvard, — S.W.3d —, 2019 Tenn. App. LEXIS 373 (Tenn. Ct. App. July 31, 2019). Section Comment. Unless provided otherwise hereinafter, any reference to “section,” “subsection” or “subdivision” means all, or such portion of, T.C.A. § 35-15-816 . This section enumerates specific powers commonly included in trust instruments and in trustee powers legislation. All the powers listed are freely subject to alteration, reduction or expansion in the terms of the trust, subject only to T.C.A. § 35-15-105 . The powers listed are also subsumed under the general authority granted in T.C.A. § 35-15-815(a) to exercise all powers over the trust property which an unmarried competent owner has over individually owned property, and any other powers appropriate to achieve the proper management, investment, and distribution of the trust property. With the exception of a trustee’s power of appointment under subdivision (b)(27), the powers listed add little of substance not already granted by T.C.A. § 35-15-815 and powers conferred elsewhere in the Tennessee Uniform Trust Code, including those listed in the Section Comment to section T.C.A. § 35-15-815 . As provided in subsection T.C.A. § 35-15-815 , the exercise of a power is subject to fiduciary duties except as modified, limited or expanded in the terms of the trust. The fact that the trustee has a power does not imply a duty that the power must be exercised. Many of the powers listed in this section are similar to the powers listed in Section 3 of the Uniform Trustees’ Powers Act (1964). Several are new, however, and other powers drawn from such act have been updated. The powers enumerated in this section may be divided into categories. Certain powers, such as the powers to acquire or sell property, borrow money, and deal with real estate, securities, and business interests, are powers that any individual can exercise. Other powers, such as the power to collect trust property, are by their very nature only applicable to trustees. Other specific powers, particularly those listed in other sections of the Tennessee Uniform Trust Code, modify a trustee duty that would otherwise apply. See, e.g ., the exceptions to the duty of loyalty provided in T.C.A. § 35-15-802 and the authorization of a trustee to make joint investments with another trust, which is an exception to earmarking requirement, provided for in T.C.A. § 35-15-810 . Subsection (a) has no counterpart in the Uniform Trust Code. It was included in this section to assure that instruments written before the original adoption of the Tennessee Uniform Trust Code in 2004 would obtain the benefits of the provisions of this section as well as those of T.C.A. § 35-50-110 , such latter section being the primary section providing a list of powers that could be incorporated into an instrument by reference prior to adoption of the Tennessee Uniform Trust Code. Subsection (b) acknowledges the ability of a settlor to freely modify, expand or reduce the powers included therein in its introductory phrase. Subdivision (b)(1) authorizes a trustee to collect trust property and collect or decline additions to the trust property. The power to collect trust property is an incident of the trustee’s duty to administer the trust as provided in T.C.A. § 35-15-801 . The trustee has a duty to enforce claims as provided in T.C.A. § 35-15-811 , the successful prosecution of which can result in collection of trust property. Pursuant to T.C.A. § 35-15-812 , the trustee also has a duty to collect trust property from a former trustee or other person holding trust property. For a non-exclusive application of the power to reject additions to the trust property, see the provisions of this subsection that grant a fiduciary the power to decline property with possible environmental liability. Subdivision (b)(2) authorizes a trustee to sell trust property, for cash or on credit, at public or private sale. Under the Restatement (Third) of Trusts: Prudent Investor Rule § 190 (1992), a power of sale is implied unless limited in the terms of the trust. In arranging a sale, a trustee must comply with the duty to act prudently as provided in T.C.A. § 35-15-801 . This duty may dictate that the sale be made with security. Subdivision (b)(4) authorizes a trustee to deposit funds in an account in a regulated financial service institution. This includes the right of a financial institution trustee to deposit funds in its own banking department as authorized by T.C.A. § 35-15-802 . Subdivision (b)(5) authorizes a trustee to borrow money. Under the Restatement (Third) of Trusts: Prudent Investor Rule § 191 (1992), the sole limitation on such borrowing is the general obligation to invest prudently. Language clarifying that the loan may extend beyond the duration of the trust was added to negate an older view that the trustee only had power to encumber the trust property for the period that the trust was in existence. Subdivision (b)(6) authorizes the trustee to continue, contribute additional capital to, or change the form of a business. Any such decision by the trustee must be made in light of the standards of the Tennessee Uniform Prudent Investor Act, but such standards can be fully altered, expanded, reduced or eliminated pursuant to T.C.A. § 35-15-105 . Subdivision (b)(7), regarding powers with respect to securities, codifies and amplifies the principles of Restatement (Second) of Trusts § 193 (1959). Subdivision (b)(9), authorizing the leasing of property, negates the older view, reflected in Restatement (Second) of Trusts § 189 cmt. c (1959), that a trustee could not lease property beyond the duration of the trust. Whether a longer term lease is appropriate is judged by the standards of prudence applicable to all investments. Subdivision (b)(10), authorizing a trustee to grant options with respect to sales, leases or other dispositions of property, negates the older view, reflected in Restatement (Second) of Trusts § 190 cmt. k (1959), that a trustee could not grant another person an option to purchase trust property. Like any other investment decision, whether the granting of an option is appropriate is a question of prudence under the standards of the Tennessee Uniform Prudent Investor Act, but such standards can be fully altered, expanded, reduced or eliminated pursuant to T.C.A. § 35-15-105 . Subdivision (b)(11), authorizing a trustee to purchase insurance, empowers a trustee to implement the duty to pro-tect trust property. See T.C.A. § 35-15-809 . The trustee may also insure beneficiaries, agents, and the trustee against liability, including liability for breach of trust. Subdivision (b)(13) is one of several provisions in the Tennessee Uniform Trust Code designed to address trustee concerns about possible liability for violations of environmental law. This subdivision collects all the powers relating to environmental concerns in one place even though some of the powers, such as the powers to pay expenses, compromise claims, and decline property, overlap with other subdivisions of this section (decline property, subdivision (b)(1); compromise claims, subdivision (b)(14); pay expenses, subdivision (b)(15)). See also T.C.A. § 35-15-701 , which grants a designated trustee the power to inspect property to determine potential violation of environmental or other law or for any purpose, and the fact that under T.C.A. § 35-15-1010 (unlike under the corresponding section of the Uniform Trust Code) a trustee is not personally liable for violation of environmental law arising from ownership or control of trust property. Subdivision (b)(14) authorizes a trustee to pay, contest, settle, or release claims. T.C.A. § 35-15-811 ] requires that a trustee need take only “reasonable” steps to enforce claims, meaning that a trustee may release a claim not only when it is uncollectible, but also when collection would be uneconomic. See Restatement (Second) of Trusts § 192 (1959) (power to compromise, arbitrate and abandon claims). T.C.A. § 35-15-811 also allows a trustee to abandon or assign a claim such trustee believes unreasonable to enforce to one or more of the beneficiaries of a trust, giving such beneficiary(ies) the ability to attempt enforcement if such beneficiary(ies) so desire(s). Subdivision (b)(15), among other things, authorizes a trustee to pay compensation to the trustee and agents without prior approval of court. Regarding the standard for setting trustee compensation and repayment of trustee expenditures, see T.C.A. §§ 35-15-708 and 35-15-709 . Subdivision (b)(16) authorizes a trustee to make elections with respect to taxes. It is intended to allow a trustee as well as any other fiduciary (as such term is defined in T.C.A. § 35-5-103 ) who holds the relevant powers, the broadest possible freedom consistent with overall objectives and provisions of the Tennessee trust statutes to exercise elections concerning taxes so that such fiduciary can provide for the overall efficient administration of a trust. Due to the intent of subdivision (b)(16), it would be illogical to limit its application to only matters that are only directly related to taxation and it application is not so limited. Accordingly, although not specifically enumerated in such subdivision, such subdivision (as well as other portions of the Tennessee trust statutes) grants a fiduciary the powers to make decisions regarding all things and matters that directly or indirectly affect taxation imposed on a trust, any of its property, any parties to the trust and any of its beneficiaries. For similar reasons, it would be illogical to limit the application of subdivision (b)(16) to only “federal, state and local taxes,” and its application is not so limited. Accordingly, although not specifically enumerated in such subdivision, such subdivision grants a fiduciary the power to exercise elections regarding all forms of taxation (regardless of name, as well as how and on what basis imposed) that is imposed on the trust, any of its property, any parties to the trust and any of its beneficiaries. Such power exists regardless of the nature or location (whether within this state, another state, the United States or within a foreign country, as well as within any subdivisions of any such locations) of the authority imposing or interpreting any form of taxation. Although not limited to taxes imposed on income, among other such elections, such subdivision specifically authorizes a trustee to make elections which relate to current, recent and future changes to the definition of “income” (as well as to the definition of any other term bearing on the taxability of any item or matter and the resulting rate or amount of tax, under any type or form of taxation). Several non-exclusive examples of such changes include: a definition of income such as an election to consider the net gains form the sale of capital assets to be part of “distributable net income” (often referred to by the acronym “DNI”) as such is defined in § 643 of the Internal Revenue Code; and any changes to matters affecting any definitions or other provisions contained in subpart D, part 1, subchapter J, of Chapter 1 of the Internal Revenue Code (i.e., the provisions of such code concerning treatment of excess distributions by trusts, including but not limited to accumulation distributions and undistributed net income, the latter often referred to by the acronym “UNI”). To the extent any provision of title 35, chapter 6, any other provision of the Tennessee trust statutes, any other Tennessee law or any foreign law are in conflict with this subdivision (b)(16), such subdivision (b)(16) controls. Subdivision (b)(17) authorizes a trustee to take action with respect to employee benefit or retirement plans, or annuities or life insurance payable to the trustee. Typically, these will be beneficiary designations which the settlor has made payable to the trustee, but the Tennessee Uniform Trust Code also allows the trustee to acquire ownership of annuities or life insurance. Moreover, elections under this subdivision may be made in order to effect the other provisions of this section, including but not limited to subdivision (b)(16). Subdivisions (b)(18) and (b)(19) allow a trustee to make loans to a beneficiary or to guarantee loans of a beneficiary upon such terms and conditions as the trustee considers fair and reasonable. The determination of what is fair and reasonable must be made in light of the fiduciary duties of the trustee and the purposes of the trust. Frequently, a trustee will make loans to a beneficiary which might be considered less than prudent in an ordinary commercial sense although of great benefit to the beneficiary and which help carry out the trust purposes. If the trustee requires security for the loan to the beneficiary, adequate security under this subdivision may consist of a charge on the beneficiary’s interest in the trust. See Restatement (Second) of Trusts § 255 (1959). It is important to note, that as with the vast majority of provisions of the Tennessee Uniform Trust Code, the provisions of subdivisions (b)(18) and (b)(19) may be modified, expanded, restricted or eliminated, subject only to T.C.A. § 35-15-105 . Subdivision (b)(20) authorizes the appointment of ancillary trustees in jurisdictions in which the regularly appointed trustee is unable or unwilling to act. Often, but certainly not exclusively, an ancillary trustee will be appointed when there is a need to manage real estate located in another jurisdiction. This subdivision allows the regularly appointed trustee to select the ancillary trustee and to confer on the ancillary trustee such powers and duties as may be necessary. The appointment of ancillary trustees is a topic which a settlor may wish to address in the terms of the trust. Subdivision (b)(21) authorizes a trustee to make payments to another person for the use or benefit of a beneficiary who is under a legal disability or who the trustee reasonably believes is incapacitated. Although an adult relative or other person receiving funds is required to spend it on the beneficiary’s behalf, it is preferable that the trustee make the distribution to a person having more formal fiduciary responsibilities. For this reason, payment may be made to an adult relative only if the trustee does not know of a conservator, guardian, custodian, or custodial trustee capable of acting for the beneficiary. Subdivision (b)(21) can also be used in furtherance of the provisions of T.C.A. §§ 35-15-506(a)(5) and 35-15-506(b)(2) . Subdivision (b)(22) authorizes a trustee to make non-pro-rata distributions and allocate particular assets in proportionate or disproportionate shares. This power provides needed flexibility and lessens the risk that a non-pro-rata distribution will be treated as a taxable sale. The power also provides needed flexibility to effect other provisions of this section, including but not limited to subdivision (b)(16). Subdivision (b)(23) authorizes a trustee to resolve disputes through mediation or arbitration. The drafters of this the Tennessee Uniform Trust Code encourage the use of such alternate methods for resolving disputes. Arbitration is a form of nonjudicial settlement agreement authorized by T.C.A. § 35-15-111 . In representing beneficiaries and others in connection with arbitration or mediation, the representation principles of title 35, chapter 15, part 3 may be applied. Settlors wishing to encourage use of alternate dispute resolution may draft to provide it. For sample language, see American Arbitration Association, Arbitration Rules for Wills and Trusts (1995). Subdivision (b)(24) authorizes a trustee to prosecute or defend an action. As to the propriety of reimbursement for attorney’s fees and other expenses of an action or judicial proceeding, see T.C.A. § 35-15-709 and its Section Comment. See also T.C.A. § 35-15-811 relative to a trustee’s duty to defend actions. Subdivision(b)(25) authorizes a fiduciary to execute and deliver all forms of instruments that facilitate exercise of that fiduciary’s powers. Subdivision (b)(26), which is similar to section 344 of the Restatement (Second) of Trusts (1959), clarifies that even though the trust has terminated, the trustee retains the powers needed to wind up the administration of the trust and distribute the remaining trust property. Subdivision (b)(27) authorizes a trustee who possesses a discretionary power to distribute principal outright to trust beneficiaries to exercise that power in further trust. This power, which is commonly referred to as a “decanting” power, is considered a limited power of appointment. The power may be exercised with respect to any trust that is administered in Tennessee. In order to exercise the power, the Trustee is required to sign a written notarized instrument that is maintained with the records of the original trust as well as the second trust. The Trustee does not have to obtain consent of the beneficiaries or a Court in order to exercise the power. The power may only be exercised in favor of the proper objects of the exercise of the discretionary power. This means that new beneficiaries cannot be added to the second trust, though the second trust does not have to benefit all of the beneficiaries of the original trust. The second trust may grant a power of appointment to a beneficiary of the original trust, which power may be exercisable in favor of beneficiaries who were not beneficiaries of the original trust. There are several limitations on the exercise of the power that prevent loss of tax benefits: If a right is acquired, extinguished, or barred upon the expiration of a prescribed period that has commenced to run under any other statute before July 1, 2013, that statute continues to apply to the right even if it has been repealed or superseded.