The bill amends the Powers of Appointment Act of 1967 by updating sections 5a and 14 to clarify the conditions under which a trustee can exercise discretionary powers to make distributions from an irrevocable trust. It allows a trustee with a presently exercisable discretionary power to appoint property to a second trust, provided certain conditions are met, such as ensuring that beneficiaries of the second trust are permissible appointees and that the exercise of the power does not adversely affect the interests of beneficiaries entitled to marital or charitable deductions. The bill also specifies that the second trust can include provisions for special or general powers of appointment and outlines the treatment of the second trust in relation to the first trust for notice requirements and trustee compensation.

Additionally, the bill modifies the language regarding the vesting of future interests in relation to the exercise of powers of appointment. It establishes that the period during which the vesting may be suspended or postponed begins on the effective date of the instrument of exercise for general powers and clarifies how the creation of subsequent powers is treated. The bill aims to codify existing common law and ensure that the rights of trustees to distribute trust property or amend trusts are not abridged.

Statutes affected:
House Introduced Bill: 556.115, 556.124