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 the 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 powers of appointment, establishing that the period during which such interests may be postponed begins on the effective date of the exercise of a general power. It clarifies that if a second power is created by the exercise of a first power, the timing of its creation is determined by the nature of the first power. The bill aims to codify existing common law and includes definitions for terms related to powers of appointment, ensuring clarity in the application of these legal concepts.

Statutes affected:
House Introduced Bill: 556.115, 556.124