Whenever an Independent Trustee may distribute assets to or for the benefit of a beneficiary, our Trustee may appoint the property subject to our Trustee’s power of distribution in trust for the benefit of one or more beneficiaries of any trust created under this instrument under the terms established by the Independent Trustee. Any trust established by the Independent Trustee and funded by the exercise of the power granted under this Section must meet these requirements:
- The trust must not reduce any fixed income, annuity, or unitrust right provided by this trust instrument to any beneficiary.
- The trust must provide for one or more of the beneficiaries of a trust created under this instrument.
- The interests of remainder beneficiaries of the trust created under this instrument must not be accelerated under the terms of the new trust.
We request the Independent Trustee consider including a provision in the new trust that permits our Trustee to distribute as much of the trust principal to the beneficiary of the trust as an Independent Trustee advises so that the beneficiary’s estate can utilize the basis increase allowed under Internal Revenue Code Section 1014 after the beneficiary’s death without causing an increase in the federal estate tax.
An Independent Trustee may not use the powers granted under this Section to extend the term of the new trust beyond the period of perpetuities provided under the governing law of this instrument.
Any trust created under this provision must not contain any provision that, if applicable, would cause the trust to fail to qualify for the marital deduction or charitable deduction, fail to qualify any gift to the trust for any gift, estate, or generation-skipping transfer annual exclusion, or disqualify the trust as a qualified subchapter S corporation shareholder.
If any beneficiary holds a presently exercisable right to withdraw property from this trust, that right may not be defeated by the exercise of the Independent Trustee’s powers granted under this Section.
The Independent Trustee’s powers granted under this Section are not diminished by the revocability or subsequent irrevocability of the trust created under this trust.
Last Updated on April 18, 2017 by The Orlando Law Group
