KRS 386B.8-140: Discretionary powers -- Tax savings.

(1) The judicial standard of review for a discretionary power is that the trustee shall

exercise the power reasonably, in good faith, and in accordance with the terms and

purposes of the trust and the interests of the beneficiaries, except that a

reasonableness standard shall not be applied to the exercise of discretion by the

trustee if the terms of the trust so provide. The words "sole," "absolute,"

"uncontrolled," or words of similar import in the absence of any standards to guide

the trustee in exercising i ts discretion mean that a reasonableness standard will not

apply. The greater the grant of discretion by the settlor to the trustee, the broader the

range of permissible conduct by the trustee in exercising it.

(2) Subject to subsection (4) of this section , and unless the terms of the trust expressly

indicate that a rule in this subsection shall not apply:

(a) A person other than a settlor who is a beneficiary and trustee of a trust that

confers on the trustee a power to make discretionary distributions to or for the

trustee's personal benefit may exercise the power only in accordance with an

ascertainable standard; and

(b) A trustee may not exercise a power to make discretionary distributions to

satisfy a legal obligation of support that the trustee persona lly owes another

person.

(3) A power whose exercise is limited or prohibited by subsection (2) of this section

may be exercised by a majority of the remaining trustees whose exercise of the

power is not so limited or prohibited. If the power of all trustee s is so limited or

prohibited, the court may appoint a special fiduciary with authority to exercise the

power.

(4) Subsection (2) of this section shall not apply to:

(a) A power held by the settlor's spouse who is the trustee of a trust for which a

marital deduction, as defined in 26 U.S.C. sec. 2056(b)(5) or 2523(e), as in

effect on July 15, 2014, or as later amended, was previously allowed;

(b) Any trust during any period that the trust may be revoked or amended by its

settlor; or

(c) A trust if contribut ions to the trust qualify for the annual exclusion under 26

U.S.C. sec. 2503(c), as in effect on July 15, 2014, or as later amended.