Vermont § 814 - Discretionary powers; tax savings

§ 814. Discretionary powers; tax savings

• (a) Notwithstanding the breadth of discretion granted to a trustee in the terms of the
  trust, including the use of such terms as “absolute,” “sole,” or “uncontrolled,” the
  trustee shall exercise a discretionary power in good faith and in accordance with
  the terms and purposes of the trust and the interests of the beneficiaries. (b) Subject to subsection (d) of this section, and unless the terms of the trust expressly
  indicate that a rule in this subsection does not apply: (1) a person other than a settlor who is a beneficiary and trustee of a trust that confers
  on the trustee a power to make discretionary distributions to or for the trustee’s
  personal benefit may exercise the power only in accordance with an ascertainable standard;
  and (2) a trustee may not exercise a power to make discretionary distributions to satisfy
  a legal obligation of support that the trustee personally owes another person. (c) A power whose exercise is limited or prohibited by subsection (b) of this section
  may be exercised by a majority of the remaining trustees whose exercise of the power
  is not so limited or prohibited. If the power of all trustees is so limited or prohibited,
  the Probate Division of the Superior Court may appoint a special fiduciary with authority
  to exercise the power. (d) Subsection (b) of this section does not apply to: (1) a power held by the settlor’s spouse who is the trustee of a trust for which a marital
  deduction, as defined in § 2056(b)(5) or 2523(e) of the Internal Revenue Code of 1986, as in effect on the effective date of this title, was previously allowed; (2) any trust during any period that the trust may be revoked or amended by its settlor;
  or (3) a trust if contributions to the trust qualify for the annual exclusion under § 2503(c) of the Internal Revenue Code of 1986, as in effect on the effective date of this title. (Added 2009, No. 20, § 1; amended 2009, No. 154 (Adj. Sess.), § 236, eff. February 1, 2011.)