(1) As used in this section, unless the context otherwise requires:
"Noncontingent right" means a right that is not subject to the exercise of discretion or theoccurrence 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.
"Presumptive remainder beneficiary" means a qualified beneficiary other than a current beneficiary.
"Successor beneficiary" means a beneficiary that is not a qualified beneficiary on the datethe 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.
"Vested interest" means:
A right to a mandatory distribution that is a noncontingent right as of the date of the exerciseof the decanting power;
A current and noncontingent right, annually or more frequently, to a mandatory distributionof income, a specified dollar amount, or a percentage of value of some or all of the trust property;
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;
A presently exercisable general power of appointment; or
A right to receive an ascertainable part of the trust property on the trust's termination whichis not subject to the exercise of discretion or to the occurrence of a specified event that is not certain to occur.
Subject to subsection (3) of this section and section 15-16-914, an authorized fiduciary thathas 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.
Subject to section 15-16-913, in an exercise of the decanting power under this section, asecond trust may not:
Include as a current beneficiary a person that is not a current beneficiary of the first trust,except as otherwise provided in subsection (4) of this section;
Include as a presumptive remainder beneficiary or successor beneficiary a person that is nota current beneficiary, presumptive remainder beneficiary, or successor beneficiary of the first trust, except as otherwise provided in subsection (4) of this section; or (c) Reduce or eliminate a vested interest.
(4) Subject to section 15-16-914 and paragraph (c) of subsection (3) of this section, 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:
Retain a power of appointment granted in the first trust;
Omit a power of appointment granted in the first trust, other than a presently exercisablegeneral power of appointment;
Create or modify a power of appointment if the powerholder is a current beneficiary of thefirst trust and the authorized fiduciary has expanded distributive discretion to distribute principal to the beneficiary; and
Create or modify a power of appointment if the powerholder is a presumptive remainderbeneficiary 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.
A power of appointment described in paragraph (a), (b), (c), or (d) of subsection (4) of thissection 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.
If an authorized fiduciary has expanded distributive discretion over part but not all of theprincipal 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.
Source: L. 2016: Entire part added, (SB 16-085), ch. 228, p. 878, § 1, effective August 10.