Vermont § 1411 - Decanting power under expanded distributive discretion

§ 1411. Decanting power under expanded distributive discretion

• (a) As used in this section: (1) “Noncontingent right” means a right that is not subject to the exercise of discretion
  or the 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 to any person other than the beneficiary or the beneficiary’s
  estate. (2) “Presumptive remainder beneficiary” means a qualified beneficiary other than a current
  beneficiary. (3) “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. (4) “Vested interest” means: (A) a right to a mandatory distribution that is a noncontingent right as of the date of
  the exercise of the decanting power; (B) a 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; (C) a 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; (D) a presently exercisable general power of appointment; or (E) a 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. (b) Subject to subsection (c) of this section and section 1414 of this title, an authorized fiduciary that has expanded distributive discretion over the principal
  of a first trust for the benefit of one or more current beneficiaries may exercise
  the decanting power over the principal of the first trust. (c) Subject to section 1413 of this title, in an exercise of the decanting power under this section, a second trust shall not: (1) include as a current beneficiary a person who is not a current beneficiary of the
  first trust, except as otherwise provided in subsection (d) of this section; (2) include as a presumptive remainder beneficiary or successor beneficiary a person who
  is not a current beneficiary, presumptive remainder beneficiary, or successor beneficiary
  of the first trust, except as otherwise provided in subsection (d) of this section;
  or (3) reduce or eliminate a vested interest. (d) Subject to subdivision (c)(3) of this section and section 1414 of this title, in an exercise of the decanting power under this section, 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 if then living,
  a current beneficiary. (e) A power of appointment described in subdivisions (d)(1)–(4) of this section 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. (f) If an authorized fiduciary has expanded distributive discretion over part but not
  all of the principal of a first trust, the fiduciary may exercise the decanting power
  under this section over that part of the principal over which the authorized fiduciary
  has expanded distributive discretion. (Added 2023, No. 177 (Adj. Sess.), § 1, eff. July 1, 2024.)