(a) Any power conferred upon a limited purpose trust company formed under Chapter 7 of Title 5 in its capacity as a fiduciary which would, except for this section, constitute in whole or in part a general power of appointment if such power were held by any officer, director or shareholder of the limited purpose trust company may only be exercised in the manner provided in subsection (b) of this section.

(b) A power described in subsection (a) of this section may, to the extent permissible under such power, be exercised as follows:

(1) The limited purpose trust company may exercise the power in favor of a person other than any officer, director or shareholder of the limited purpose trust company.

(2) The limited purpose trust company may only exercise the power in favor of, or for the benefit of (including in discharge of a support obligation), an officer, director or shareholder of the limited purpose trust company to provide for that person’s health, education, support or maintenance as described under Internal Revenue Code §§ 2041 and 2514 [26 U.S.C. § 2041 or § 2514].

(3) If the power described in subsection (a) of this section is conferred upon 2 or more fiduciaries, it may be exercised by the fiduciary or fiduciaries who are not disqualified from exercising the power as if such fiduciary or fiduciaries were the only fiduciary or fiduciaries.

(4) If all of the serving fiduciaries are disqualified from exercising a power, the court that would have jurisdiction to appoint a fiduciary under the instrument if there were no fiduciary currently serving may appoint a special fiduciary whose only power is to exercise the power that cannot be exercised by the other fiduciaries by reason of subsection (a) of this section.

(5) Subsection (a) of this section shall not apply to any power to the extent that it is exercisable in favor of:

a. The settlor of a trust that is revocable or amendable by the settlor;

b. A decedent’s or settlor’s spouse who is a beneficiary of a trust for which a marital deduction has been allowed; or

c. The settlor of a trust holding property that is the subject of a qualified disposition within the meaning of § 3570(7) of this title, unless the settlor has retained a special power of appointment described in § 3570(11)b.2. of this title.

(c) Any power conferred upon a limited purpose trust company in its capacity as a fiduciary to allocate receipts and expenses as between income and principal in favor of an officer, director or shareholder of the limited purpose trust company must be exercised in accordance with Chapter 61 of this title.

(d) “General power of appointment” means any power that would cause income to be taxed to a taxpayer in that taxpayer’s individual capacity under § 678 [26 U.S.C. § 678] of the Internal Revenue Code, and any power that would be a general power of appointment, in whole or in part, under § 2041(b)(1) or § 2514(c) of the Internal Revenue Code [26 U.S.C. § 2041(b)(1) or § 2514(c)].

(e) “Internal Revenue Code” means the Internal Revenue Code of 1986 [26 U.S.C. § 1, et seq.], as amended.

(f) “Fiduciary” has the meaning set forth in § 3301 of Title 12.

(g) This section applies to all fiduciary relationships in existence on May 14, 2001 and to all other fiduciary relationships that come into existence after that date. The provisions of this section are declaratory of existing law, and neither modify nor amend existing fiduciary relationships.

73 Del. Laws, c. 37, § 1; 70 Del. Laws, c. 186, § 1.