(a) No person serving as trustee or cotrustee of a trust established by a will or inter vivos instrument shall have or be deemed to possess in his or her capacity as trustee discretionary power or authority to expend or distribute income or principal of the trust to himself or herself or for the discharge of such trustee's legal obligations, unless:

(1) The trustee is also the settlor or creator of the trust, and the trust is revocable or amendable by the settlor; or

(2) The trustee is the spouse, widow or widower of the settlor of the trust, and a marital deduction has been allowed for federal estate tax purposes with respect to the trust property that is subject to such discretionary power; or

(3) The terms of the will or governing trust instrument expressly grant such discretionary power, and such terms either:

(A) Include with a specific reference to this section an acknowledgment that the designated trustee is specifically intended to be both a holder of such power and a permissible beneficiary of the exercise of such power, notwithstanding any conflict of interest or tax consequence that may result from such fact; or

(B) Specifically limit the scope of such power to expenditures and distributions of income or principal upon an ascertainable standard, such as health, maintenance, support and education, as those terms are described in Sections 2041 and 2514 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended.

(b) Unless a will or governing trust instrument expressly provides otherwise, the lack of such discretionary power by one trustee shall not impair any authority granted by the will or governing trust instrument to any other trustee or cotrustee to make such distributions with respect to the same trust to or for the benefit of the trustee who lacks such power, as long as such other trustee exercises the power without participation by the trustee who lacks such power.

(c) This section shall take effect July 6, 1995, and shall apply to all wills, codicils, revocable inter vivos trust agreements and amendments thereto created by persons dying on or after October 1, 1995, and to irrevocable trusts established by inter vivos agreement executed on or after October 1, 1995.

(P.A. 95-315, S. 1, 2; P.A. 06-196, S. 275.)

History: P.A. 95-315 effective July 6, 1995; P.A. 06-196 made a technical change in Subsec. (b), effective June 7, 2006.