The bill amends Section 19-3A-104 of the Code of Alabama 1975 to allow trustees to adjust trust receipts and disbursements between principal and income without needing express authority from the trust instrument. This change eliminates the previous requirement that the trust terms must specifically reference the trustee's power to make such adjustments. The new language clarifies that a trustee may make these adjustments as deemed necessary, provided they act as a prudent investor and consider various relevant factors, including the trust's purpose, the beneficiaries' needs, and the nature of the trust assets.

Additionally, the bill makes several technical revisions to update the existing code language and includes provisions that restrict trustees from making adjustments that could negatively impact certain beneficiaries or tax benefits. It specifies that if a trust's terms limit a trustee's power to adjust between principal and income, those limitations will only apply if it is clear that the trust intends to deny the trustee this power. The act is set to take effect on October 1, 2026.

Statutes affected:
Introduced: 19-3A-104, 19-3A-104
Enrolled: 19-3A-104, 19-3A-104