KRS 386B.13-100: Definitions for section -- Decanting power under expanded

distributive discretion.

(1) As used in this section:

(a) "Noncontingent right" means a right that is not subject to the exercise of

discretion or the occurrence of a specified eve nt 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;

(b) "Presumptive remainder beneficiary" means a qualified beneficiary other than

a current beneficiary;

(c) "Successor beneficiary" means a beneficiary that is not a qualified beneficiary

on the date the beneficiary's qualification is determined. The term does not

include a perso n that is a beneficiary only because the person holds a

nongeneral power of appointment; and

(d) "Vested interest" means:

1. A right to a mandatory distribution that is a noncontingent right as of the

date of the exercise of the decanting power;

2. A curre nt and noncontingent right, annually or more frequently, to a

mandatory distribution of income, a specified dollar amount, or a

percentage of value of some or all of the trust property;

3. 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;

4. A presently exercisable general power of appointment; or

5. A right to receive an ascertainable part of the trust property on the trust's

termination which is not subject to the exercise of discretion or to the

occurrence of a specified event that is not certain to occur.

(2) Subject to subsection (3) of this section and KRS 386B.13 -130, an a uthorized

fiduciary that has expanded distributive discretion over the principal of a first trust

for the benefit of one (1) or more current beneficiaries may exercise the decanting

power over the principal of the first trust.

(3) Subject to KRS 386B.13 -120, in an exercise of the decanting power under this

section, a second trust shall not:

(a) 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;

(b) Include as a presumptive remainder beneficiary or successor beneficiary a

person that is not a 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 subsection (3)(c) of this section and KRS 386B.13 -130, 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:

(a) Retain a power of appointment granted in the first trust;

(b) Omit a power of appointment granted in the first trust, other than a presently

exercisable general power of appointment;

(c) Create or modify a power of appointment if the powerholder is a current

beneficiary of the first trust and the authorized fiduciary has expanded

distributive discretion to distribute principal to the beneficiary; and

(d) Create or modify a power of appointment if the powerholder is a presumptive

remainder beneficiary 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.

(5) A power of appointment described in subsection ( 4)(a) to (d) of this section 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.

(6) If an authorized fiduciary has expan ded distributive discretion over part but not all

of the principal 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.