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.

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 second power is considered created on the effective date of the exercise. 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
As Passed by the House: 556.115, 556.124