S T A T E   O F   N E W   Y O R K
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                                 8297--A

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                              June 10, 2011
                               ___________

Introduced  by  M. of A. WEINSTEIN -- (at request of the Office of Court
  Administration) -- read once and referred to the Committee on  Judici-
  ary  --  committee  discharged,  bill  amended,  ordered  reprinted as
  amended and recommitted to said committee

AN ACT to amend the estates, powers and trusts law, in relation  to  the
  exercise of a power of appointment and an authorized trustee's author-
  ity  to  invade  trust  principal; and to repeal certain provisions of
  such law relating thereto

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Paragraphs  (b),  (c),  (d),  (e), (f) and (g) of section
10-6.6 of the estates, powers and trusts law are REPEALED.
  S 2. Section 10-6.6 of the estates, powers and trusts law  is  amended
by adding 18 new paragraphs (b), (c), (d), (e), (f), (g), (h), (i), (j),
(k), (l), (m), (n), (o), (p), (q), (r) and (s) to read as follows:
  (B)  AN  AUTHORIZED  TRUSTEE WITH UNLIMITED DISCRETION TO INVADE TRUST
PRINCIPAL MAY APPOINT PART OR ALL OF SUCH PRINCIPAL TO A TRUSTEE  OF  AN
APPOINTED  TRUST FOR, AND ONLY FOR THE BENEFIT OF, ONE, MORE THAN ONE OR
ALL OF THE CURRENT BENEFICIARIES OF THE INVADED TRUST (TO THE  EXCLUSION
OF  ANY  ONE  OR  MORE OF SUCH CURRENT BENEFICIARIES). THE SUCCESSOR AND
REMAINDER BENEFICIARIES OF SUCH APPOINTED TRUST SHALL BE ONE, MORE  THAN
ONE  OR ALL OF THE SUCCESSOR AND REMAINDER BENEFICIARIES OF SUCH INVADED
TRUST (TO THE EXCLUSION OF ANY ONE OR MORE OF SUCH SUCCESSOR AND REMAIN-
DER BENEFICIARIES).
  (1) AN AUTHORIZED TRUSTEE EXERCISING THE POWER  UNDER  THIS  PARAGRAPH
MAY  GRANT  A DISCRETIONARY POWER OF APPOINTMENT AS DEFINED IN PARAGRAPH
(C) OF SECTION 10-3.4 OF THIS ARTICLE (INCLUDING A PRESENTLY EXERCISABLE
POWER OF APPOINTMENT) IN THE APPOINTED TRUST  TO  ONE  OR  MORE  OF  THE
CURRENT  BENEFICIARIES OF THE INVADED TRUST, PROVIDED THAT THE BENEFICI-
ARY GRANTED A POWER TO APPOINT  COULD  RECEIVE  THE  PRINCIPAL  OUTRIGHT
UNDER THE TERMS OF THE INVADED TRUST.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13047-02-1
              

A. 8297--A                          2

  (2)  IF  THE  AUTHORIZED  TRUSTEE  GRANTS A POWER OF APPOINTMENT UNDER
SUBPARAGRAPH (L) OF THIS PARAGRAPH,  EXCEPT  AS  OTHERWISE  PROVIDED  IN
SUBPARAGRAPH  (3)  OF THIS PARAGRAPH, THE GRANTED POWER MAY ONLY EXCLUDE
AS PERMISSIBLE APPOINTEES ONE OR MORE OF THE BENEFICIARY,  THE  CREATOR,
OR  THE CREATOR'S SPOUSE, OR ANY OF THE ESTATES, CREDITORS, OR CREDITORS
OF THE ESTATES OF THE BENEFICIARY, THE CREATOR OR THE CREATOR'S SPOUSE.
  (3) IF THE AUTHORIZED TRUSTEE EXERCISES THE  POWER  UNDER  THIS  PARA-
GRAPH,  THE  APPOINTED TRUST MAY GRANT ANY POWER OF APPOINTMENT INCLUDED
IN THE INVADED TRUST PROVIDED SUCH POWER HAS THE SAME CLASS OF PERMISSI-
BLE APPOINTEES AS THE POWER OF APPOINTMENT IN THE INVADED TRUST  AND  IS
EXERCISABLE  IN  THE  SAME  FASHION  AS  THE POWER OF APPOINTMENT IN THE
INVADED TRUST.
  (4) IF THE BENEFICIARY OR  BENEFICIARIES  OF  THE  INVADED  TRUST  ARE
DESCRIBED  BY A CLASS, THE BENEFICIARY OR BENEFICIARIES OF THE APPOINTED
TRUST MAY INCLUDE PRESENT OR FUTURE MEMBERS OF SUCH CLASS.
  (C) AN AUTHORIZED TRUSTEE WITH THE POWER TO INVADE TRUST PRINCIPAL BUT
WITHOUT UNLIMITED DISCRETION MAY APPOINT PART OR ALL OF THE PRINCIPAL OF
THE TRUST TO A TRUSTEE OF AN APPOINTED TRUST, PROVIDED THAT THE  CURRENT
BENEFICIARIES  OF  THE  APPOINTED TRUST SHALL BE THE SAME AS THE CURRENT
BENEFICIARIES OF THE INVADED TRUST AND THE SUCCESSOR AND REMAINDER BENE-
FICIARIES OF THE APPOINTED TRUST SHALL BE THE SAME AS THE SUCCESSOR  AND
REMAINDER BENEFICIARIES OF THE INVADED TRUST.
  (1)  IF  THE  AUTHORIZED  TRUSTEE EXERCISES THE POWER UNDER THIS PARA-
GRAPH, THE APPOINTED TRUST SHALL INCLUDE THE SAME  LANGUAGE  AUTHORIZING
THE  TRUSTEE  TO  DISTRIBUTE  THE  INCOME OR INVADE THE PRINCIPAL OF THE
APPOINTED TRUST AS IN THE INVADED TRUST.
  (2) IF THE AUTHORIZED TRUSTEE EXERCISES THE POWER UNDER THIS PARAGRAPH
TO EXTEND THE TERM OF THE APPOINTED TRUST BEYOND THE TERM OF THE INVADED
TRUST, FOR ANY PERIOD AFTER  THE  INVADED  TRUST  WOULD  HAVE  OTHERWISE
TERMINATED  UNDER  THE  PROVISIONS  OF  THE INVADED TRUST, THE APPOINTED
TRUST, IN ADDITION TO THE  LANGUAGE  REQUIRED  TO  BE  INCLUDED  IN  THE
APPOINTED TRUST PURSUANT TO SUBPARAGRAPH (1) OF THIS PARAGRAPH, MAY ALSO
INCLUDE  LANGUAGE  PROVIDING  THE  TRUSTEES WITH UNLIMITED DISCRETION TO
INVADE THE PRINCIPAL OF THE APPOINTED TRUST DURING SUCH EXTENDED TERM.
  (3) IF THE BENEFICIARY OR  BENEFICIARIES  OF  THE  INVADED  TRUST  ARE
DESCRIBED  BY A CLASS, THE BENEFICIARY OR BENEFICIARIES OF THE APPOINTED
TRUST SHALL INCLUDE PRESENT OR FUTURE MEMBERS OF SUCH CLASS.
  (4) IF THE AUTHORIZED TRUSTEE EXERCISES THE POWER UNDER THIS PARAGRAPH
AND IF THE INVADED TRUST GRANTS A POWER OF APPOINTMENT TO A  BENEFICIARY
OF  THE TRUST, THE APPOINTED TRUST SHALL GRANT SUCH POWER OF APPOINTMENT
IN THE APPOINTED TRUST AND THE CLASS OF PERMISSIBLE APPOINTEES SHALL  BE
THE SAME AS IN THE INVADED TRUST.
  (D)  AN  EXERCISE  OF  THE POWER TO INVADE TRUST PRINCIPAL UNDER PARA-
GRAPHS (B) AND (C) OF THIS SECTION SHALL BE CONSIDERED THE EXERCISE OF A
SPECIAL POWER OF APPOINTMENT AS DEFINED IN SECTION 10-3.2 OF THIS  ARTI-
CLE.
  (E)  THE  APPOINTED  TRUST TO WHICH AN AUTHORIZED TRUSTEE APPOINTS THE
ASSETS OF THE INVADED TRUST MAY HAVE A TERM THAT IS LONGER THAN THE TERM
SET FORTH IN THE INVADED TRUST, INCLUDING, BUT NOT LIMITED  TO,  A  TERM
MEASURED BY THE LIFETIME OF A CURRENT BENEFICIARY.
  (F)  IF  AN  AUTHORIZED TRUSTEE HAS UNLIMITED DISCRETION TO INVADE THE
PRINCIPAL OF A TRUST AND THE SAME TRUSTEE OR  ANOTHER  TRUSTEE  HAS  THE
POWER  TO INVADE PRINCIPAL UNDER THE TRUST INSTRUMENT WHICH POWER IS NOT
SUBJECT TO UNLIMITED DISCRETION, SUCH AUTHORIZED TRUSTEE HAVING UNLIMIT-
ED DISCRETION MAY EXERCISE THE POWER OF APPOINTMENT UNDER PARAGRAPH  (B)
OF THIS SECTION.

A. 8297--A                          3

  (G)  AN  AUTHORIZED TRUSTEE MAY EXERCISE THE POWER TO APPOINT IN FAVOR
OF AN APPOINTED TRUST UNDER PARAGRAPHS  (B)  AND  (C)  OF  THIS  SECTION
WHETHER  OR  NOT  THERE  IS A CURRENT NEED TO INVADE PRINCIPAL UNDER THE
TERMS OF THE INVADED TRUST.
  (H)  AN AUTHORIZED TRUSTEE EXERCISING THE POWER UNDER THIS SECTION HAS
A FIDUCIARY DUTY TO EXERCISE THE POWER IN THE BEST INTERESTS OF  ONE  OR
MORE PROPER OBJECTS OF THE EXERCISE OF THE POWER AND AS A PRUDENT PERSON
WOULD EXERCISE THE POWER UNDER THE PREVAILING CIRCUMSTANCES. THE AUTHOR-
IZED  TRUSTEE  MAY NOT EXERCISE THE POWER UNDER THIS SECTION IF THERE IS
SUBSTANTIAL EVIDENCE OF A CONTRARY INTENT OF THE CREATOR AND  IT  CANNOT
BE  ESTABLISHED  THAT  THE  CREATOR WOULD BE LIKELY TO HAVE CHANGED SUCH
INTENTION UNDER THE CIRCUMSTANCES EXISTING AT THE TIME OF  THE  EXERCISE
OF  THE  POWER.  THE PROVISIONS OF THE INVADED TRUST ALONE ARE NOT TO BE
VIEWED AS SUBSTANTIAL EVIDENCE OF  A  CONTRARY  INTENT  OF  THE  CREATOR
UNLESS  THE  INVADED TRUST EXPRESSLY PROHIBITS THE EXERCISE OF THE POWER
IN THE MANNER INTENDED BY THE AUTHORIZED TRUSTEE.
  (I) UNLESS THE AUTHORIZED TRUSTEE PROVIDES OTHERWISE:
  (1) THE APPOINTMENT OF ALL OF THE ASSETS COMPRISING THE  PRINCIPAL  OF
THE  INVADED  TRUST  TO  AN  APPOINTED  TRUST SHALL INCLUDE SUBSEQUENTLY
DISCOVERED ASSETS OF THE INVADED TRUST AND  UNDISTRIBUTED  PRINCIPAL  OF
THE INVADED TRUST ACQUIRED AFTER THE APPOINTMENT TO THE APPOINTED TRUST;
AND
  (2)  THE  APPOINTMENT OF PART BUT NOT ALL OF THE ASSETS COMPRISING THE
PRINCIPAL OF THE INVADED TRUST TO AN APPOINTED TRUST SHALL  NOT  INCLUDE
SUBSEQUENTLY  DISCOVERED ASSETS BELONGING TO THE INVADED TRUST AND PRIN-
CIPAL PAID TO OR ACQUIRED BY THE INVADED TRUST AFTER THE APPOINTMENT  TO
THE  APPOINTED TRUST; SUCH ASSETS SHALL REMAIN THE ASSETS OF THE INVADED
TRUST.
  (J) THE EXERCISE OF THE POWER TO APPOINT TO AN APPOINTED  TRUST  UNDER
PARAGRAPH (B) OR (C) OF THIS SECTION SHALL BE EVIDENCED BY AN INSTRUMENT
IN  WRITING,  SIGNED,  DATED AND ACKNOWLEDGED BY THE AUTHORIZED TRUSTEE.
THE EXERCISE OF THE POWER SHALL BE EFFECTIVE THIRTY DAYS AFTER THE  DATE
OF  SERVICE  OF  THE INSTRUMENT AS SPECIFIED IN SUBPARAGRAPH (2) OF THIS
PARAGRAPH, UNLESS THE PERSONS ENTITLED TO NOTICE CONSENT IN WRITING TO A
SOONER EFFECTIVE DATE.
  (1) AN AUTHORIZED TRUSTEE MAY EXERCISE THE POWER AUTHORIZED  BY  PARA-
GRAPHS  (B)  AND (C) OF THIS SECTION WITHOUT THE CONSENT OF THE CREATOR,
OR OF THE PERSONS INTERESTED IN THE INVADED  TRUST,  AND  WITHOUT  COURT
APPROVAL,  PROVIDED  THAT THE AUTHORIZED TRUSTEE MAY SEEK COURT APPROVAL
FOR THE EXERCISE WITH NOTICE TO ALL PERSONS INTERESTED  IN  THE  INVADED
TRUST.
  (2)  A  COPY OF THE INSTRUMENT EXERCISING THE POWER AND A COPY OF EACH
OF THE INVADED TRUST AND THE APPOINTED TRUST SHALL BE DELIVERED  (A)  TO
THE  CREATOR,  IF LIVING, OF THE INVADED TRUST, (B) TO ANY PERSON HAVING
THE RIGHT, PURSUANT TO THE TERMS OF THE  INVADED  TRUST,  TO  REMOVE  OR
REPLACE  THE AUTHORIZED TRUSTEE EXERCISING THE POWER UNDER PARAGRAPH (B)
OR (C) OF THIS SECTION, AND (C) TO ANY PERSONS INTERESTED IN THE INVADED
TRUST AND THE APPOINTED TRUST (OR, IN THE CASE OF ANY PERSONS INTERESTED
IN THE TRUST, TO ANY GUARDIAN OF THE PROPERTY, CONSERVATOR  OR  PERSONAL
REPRESENTATIVE  OF ANY SUCH PERSON OR THE PARENT OR PERSON WITH WHOM ANY
SUCH MINOR PERSON RESIDES), BY  REGISTERED  OR  CERTIFIED  MAIL,  RETURN
RECEIPT  REQUESTED,  OR  BY  PERSONAL  DELIVERY  OR  IN ANY OTHER MANNER
DIRECTED BY THE COURT HAVING JURISDICTION OVER THE INVADED TRUST.
  (3) THE INSTRUMENT  EXERCISING  THE  POWER  SHALL  STATE  WHETHER  THE
APPOINTMENT IS OF ALL THE ASSETS COMPRISING THE PRINCIPAL OF THE INVADED
TRUST  OR  A PART BUT NOT ALL THE ASSETS COMPRISING THE PRINCIPAL OF THE

A. 8297--A                          4

INVADED TRUST AND IF A PART, THE APPROXIMATE PERCENTAGE OF THE VALUE  OF
THE  PRINCIPAL  OF THE INVADED TRUST THAT IS THE SUBJECT OF THE APPOINT-
MENT.
  (4)  A  PERSON INTERESTED IN THE INVADED TRUST MAY OBJECT TO THE TRUS-
TEE'S EXERCISE OF THE POWER UNDER THIS  SECTION  BY  SERVING  A  WRITTEN
NOTICE  OF OBJECTION UPON THE TRUSTEE PRIOR TO THE EFFECTIVE DATE OF THE
EXERCISE OF THE POWER. THE FAILURE TO  OBJECT  SHALL  NOT  CONSTITUTE  A
CONSENT.
  (5) THE RECEIPT OF A COPY OF THE INSTRUMENT EXERCISING THE POWER SHALL
NOT  AFFECT  THE  RIGHT OF ANY PERSON INTERESTED IN THE INVADED TRUST TO
COMPEL THE AUTHORIZED TRUSTEE WHO EXERCISED  THE  POWER  OF  APPOINTMENT
PURSUANT  TO  PARAGRAPH  (B)  OR (C) OF THIS SECTION TO ACCOUNT FOR SUCH
EXERCISE AND SHALL NOT FORECLOSE ANY SUCH INTERESTED PERSON FROM OBJECT-
ING TO AN ACCOUNT OR COMPELLING A TRUSTEE TO ACCOUNT.
  (6) A COPY OF THE INSTRUMENT EXERCISING THE POWER SHALL BE  KEPT  WITH
THE  RECORDS OF THE INVADED TRUST AND THE ORIGINAL SHALL BE FILED IN THE
COURT HAVING JURISDICTION OVER THE INVADED TRUST. WHERE A TRUSTEE OF  AN
INTER  VIVOS  TRUST  EXERCISES  THE POWER AND THE TRUST HAS NOT BEEN THE
SUBJECT OF A PROCEEDING IN THE SURROGATE'S COURT, NO FILING IS REQUIRED.
  (K) THIS SECTION SHALL NOT BE CONSTRUED TO ABRIDGE THE  RIGHT  OF  ANY
TRUSTEE TO APPOINT PROPERTY IN FURTHER TRUST THAT ARISES UNDER THE TERMS
OF  THE  GOVERNING INSTRUMENT OF A TRUST OR UNDER ANY OTHER PROVISION OF
LAW OR UNDER COMMON LAW, OR AS DIRECTED BY ANY COURT HAVING JURISDICTION
OVER THE TRUST.
  (1) NOTHING IN THIS SECTION IS INTENDED TO CREATE OR IMPLY A  DUTY  TO
EXERCISE  A  POWER  TO INVADE PRINCIPAL, AND NO INFERENCE OF IMPROPRIETY
SHALL BE MADE AS A RESULT OF AN AUTHORIZED TRUSTEE  NOT  EXERCISING  THE
POWER CONFERRED UNDER PARAGRAPH (B) OR (C) OF THIS SECTION.
  (M)  A POWER AUTHORIZED BY PARAGRAPH (B) OR (C) OF THIS SECTION MAY BE
EXERCISED, SUBJECT TO THE PROVISIONS OF PARAGRAPH (H) OF  THIS  SECTION,
UNLESS  EXPRESSLY  PROHIBITED  BY THE TERMS OF THE GOVERNING INSTRUMENT,
BUT A GENERAL PROHIBITION OF THE AMENDMENT OR REVOCATION OF THE  INVADED
TRUST  OR  A  PROVISION  THAT CONSTITUTES A SPENDTHRIFT CLAUSE SHALL NOT
PRECLUDE THE EXERCISE OF A POWER UNDER PARAGRAPH  (B)  OR  (C)  OF  THIS
SECTION.
  (N) AN AUTHORIZED TRUSTEE MAY NOT EXERCISE A POWER AUTHORIZED BY PARA-
GRAPH (B) OR (C) OF THIS SECTION TO EFFECT ANY OF THE FOLLOWING:
  (1)  TO  REDUCE,  LIMIT OR MODIFY ANY BENEFICIARY'S CURRENT RIGHT TO A
MANDATORY DISTRIBUTION OF INCOME OR PRINCIPAL, A  MANDATORY  ANNUITY  OR
UNITRUST  INTEREST, A RIGHT TO WITHDRAW A PERCENTAGE OF THE VALUE OF THE
TRUST OR A RIGHT TO WITHDRAW A SPECIFIED DOLLAR  AMOUNT,  PROVIDED  THAT
SUCH  MANDATORY RIGHT HAS COME INTO EFFECT WITH RESPECT TO THE BENEFICI-
ARY. NOTWITHSTANDING THE FOREGOING, BUT SUBJECT TO THE OTHER LIMITATIONS
IN THIS SECTION, AN AUTHORIZED TRUSTEE MAY EXERCISE A  POWER  AUTHORIZED
BY PARAGRAPH (B) OR (C) OF THIS SECTION TO APPOINT TO AN APPOINTED TRUST
THAT  IS  A  SUPPLEMENTAL NEEDS TRUST THAT CONFORMS TO THE PROVISIONS OF
SECTION 7-1.12 OF THIS CHAPTER;
  (2) TO DECREASE OR INDEMNIFY AGAINST A TRUSTEE'S LIABILITY OR  EXONER-
ATE  A  TRUSTEE  FROM LIABILITY FOR FAILURE TO EXERCISE REASONABLE CARE,
DILIGENCE AND PRUDENCE;
  (3) TO ELIMINATE A PROVISION GRANTING  ANOTHER  PERSON  THE  RIGHT  TO
REMOVE  OR  REPLACE  THE  AUTHORIZED  TRUSTEE EXERCISING THE POWER UNDER
PARAGRAPH (B) OR (C) OF THIS SECTION UNLESS A COURT HAVING  JURISDICTION
OVER THE TRUST SPECIFIES OTHERWISE;
  (4)  TO  MAKE  A  BINDING  AND CONCLUSIVE FIXATION OF THE VALUE OF ANY
ASSET FOR PURPOSES OF DISTRIBUTION, ALLOCATION OR OTHERWISE; OR

A. 8297--A                          5

  (5) TO JEOPARDIZE (A) THE DEDUCTION OR  EXCLUSION  ORIGINALLY  CLAIMED
WITH RESPECT TO ANY CONTRIBUTION TO THE INVADED TRUST THAT QUALIFIED FOR
THE ANNUAL EXCLUSION UNDER SECTION 2503(B) OF THE INTERNAL REVENUE CODE,
THE  MARITAL  DEDUCTION UNDER SECTION 2056(A) OR 2523(A) OF THE INTERNAL
REVENUE  CODE, OR THE CHARITABLE DEDUCTION UNDER SECTION 170(A), 642(C),
2055(A) OR 2522(A) OF THE INTERNAL REVENUE CODE, (B)  THE  QUALIFICATION
OF  A  TRANSFER  AS  A DIRECT SKIP UNDER SECTION 2642(C) OF THE INTERNAL
REVENUE CODE, OR (C) ANY OTHER SPECIFIC TAX BENEFIT FOR WHICH A CONTRIB-
UTION ORIGINALLY QUALIFIED FOR INCOME, GIFT, ESTATE, OR GENERATION-SKIP-
PING TRANSFER TAX PURPOSES UNDER THE INTERNAL REVENUE CODE.
  (O) AN AUTHORIZED TRUSTEE SHALL CONSIDER THE TAX IMPLICATIONS  OF  THE
EXERCISE OF THE POWER UNDER PARAGRAPH (B) OR (C) OF THIS SECTION.
  (P)  AN AUTHORIZED TRUSTEE MAY NOT EXERCISE A POWER DESCRIBED IN PARA-
GRAPH (B) OR (C) OF THIS SECTION IN VIOLATION OF THE  LIMITATIONS  UNDER
SECTIONS 9-1.1, 10-8.1 AND 10-8.2 OF THIS CHAPTER, AND ANY SUCH EXERCISE
SHALL VOID THE ENTIRE EXERCISE OF SUCH POWER.
  (Q)(1) UNLESS A COURT OTHERWISE DIRECTS, AN AUTHORIZED TRUSTEE MAY NOT
EXERCISE  A  POWER AUTHORIZED BY PARAGRAPH (B) OR (C) OF THIS SECTION TO
CHANGE THE PROVISIONS REGARDING THE DETERMINATION OF THE COMPENSATION OF
ANY TRUSTEE; THE COMMISSIONS OR OTHER COMPENSATION PAYABLE TO THE  TRUS-
TEES OF THE INVADED TRUST MAY CONTINUE TO BE PAID TO THE TRUSTEES OF THE
APPOINTED  TRUST  DURING  THE  TERM  OF THE APPOINTED TRUST AND SHALL BE
DETERMINED IN THE SAME MANNER AS IN THE INVADED TRUST.
  (2) NO TRUSTEE SHALL RECEIVE ANY PAYING COMMISSION  OR  OTHER  COMPEN-
SATION FOR APPOINTING OF PROPERTY FROM THE INVADED TRUST TO AN APPOINTED
TRUST PURSUANT TO PARAGRAPH (B) OR (C) OF THIS SECTION.
  (R)  UNLESS  THE  INVADED  TRUST  EXPRESSLY  PROVIDES  OTHERWISE, THIS
SECTION APPLIES TO:
  (1) ANY TRUST GOVERNED BY THE LAWS OF THIS STATE,  INCLUDING  A  TRUST
WHOSE GOVERNING LAW HAS BEEN CHANGED TO THE LAWS OF THIS STATE; AND
  (2)  ANY  TRUST  THAT  HAS A TRUSTEE WHO IS AN INDIVIDUAL DOMICILED IN
THIS STATE OR A TRUSTEE WHICH IS AN ENTITY  HAVING  AN  OFFICE  IN  THIS
STATE, PROVIDED THAT A MAJORITY OF THE TRUSTEES SELECT THIS STATE AS THE
LOCATION FOR THE PRIMARY ADMINISTRATION OF THE TRUST BY AN INSTRUMENT IN
WRITING,  SIGNED  AND  ACKNOWLEDGED  BY  A MAJORITY OF THE TRUSTEES. THE
INSTRUMENT EXERCISING THIS SELECTION SHALL BE KEPT WITH THE  RECORDS  OF
THE INVADED TRUST.
  (S) FOR PURPOSES OF THIS SECTION:
  (1)  THE  TERM  "APPOINTED  TRUST"  MEANS  AN  IRREVOCABLE TRUST WHICH
RECEIVES PRINCIPAL FROM AN INVADED TRUST UNDER PARAGRAPH (B) OR  (C)  OF
THIS SECTION INCLUDING A NEW TRUST CREATED BY THE CREATOR OF THE INVADED
TRUST  OR  BY  THE TRUSTEES, IN THAT CAPACITY, OF THE INVADED TRUST. FOR
PURPOSES OF CREATING THE NEW TRUST, THE REQUIREMENT OF SECTION 7-1.17 OF
THIS CHAPTER THAT THE INSTRUMENT BE  SIGNED  BY  THE  CREATOR  SHALL  BE
DEEMED SATISFIED BY THE SIGNATURE OF THE TRUSTEE OF THE APPOINTED TRUST.
  (2)  THE  TERM "AUTHORIZED TRUSTEE" MEANS, AS TO AN INVADED TRUST, ANY
TRUSTEE OR TRUSTEES WITH AUTHORITY TO PAY TRUST PRINCIPAL TO OR FOR  ONE
OR  MORE  CURRENT  BENEFICIARIES  OTHER  THAN (I) THE CREATOR, OR (II) A
BENEFICIARY TO WHOM INCOME OR PRINCIPAL MUST BE PAID CURRENTLY OR IN THE
FUTURE, OR WHO IS OR WILL BECOME ELIGIBLE TO RECEIVE A  DISTRIBUTION  OF
INCOME  OR PRINCIPAL IN THE DISCRETION OF THE TRUSTEE (OTHER THAN BY THE
EXERCISE OF A POWER OF APPOINTMENT HELD IN A NON-FIDUCIARY CAPACITY).
  (3) REFERENCES TO SECTIONS OF THE "INTERNAL REVENUE CODE" REFER TO THE
UNITED STATES INTERNAL REVENUE CODE OF 1986, AS  AMENDED  FROM  TIME  TO
TIME,  OR  TO  CORRESPONDING  PROVISIONS  OF SUBSEQUENT INTERNAL REVENUE
LAWS, AND ALSO REFER TO CORRESPONDING PROVISIONS OF STATE LAW.

A. 8297--A                          6

  (4) THE TERM "CURRENT BENEFICIARY OR BENEFICIARIES" MEANS  THE  PERSON
OR  PERSONS  (OR  AS  TO  A CLASS, ANY PERSON OR PERSONS WHO ARE OR WILL
BECOME MEMBERS OF SUCH CLASS) TO WHOM THE TRUSTEES MAY DISTRIBUTE  PRIN-
CIPAL AT THE TIME OF THE EXERCISE OF THE POWER.
  (5)  THE  TERM  "INVADE"  SHALL  MEAN THE POWER TO PAY DIRECTLY TO THE
BENEFICIARY OF A TRUST OR MAKE APPLICATION FOR THE BENEFIT OF THE  BENE-
FICIARY.
  (6)  THE  TERM  "INVADED  TRUST"  MEANS ANY EXISTING IRREVOCABLE INTER
VIVOS OR TESTAMENTARY TRUST WHOSE PRINCIPAL IS APPOINTED UNDER PARAGRAPH
(B) OR (C) OF THIS SECTION.
  (7) THE TERM "PERSON OR PERSONS INTERESTED IN THE INVADED TRUST" SHALL
MEAN ANY PERSON OR  PERSONS  UPON  WHOM  SERVICE  OF  PROCESS  WOULD  BE
REQUIRED  IN  A PROCEEDING FOR THE JUDICIAL SETTLEMENT OF THE ACCOUNT OF
THE TRUSTEE, TAKING INTO ACCOUNT SECTION THREE HUNDRED  FIFTEEN  OF  THE
SURROGATE'S COURT PROCEDURE ACT.
  (8)  THE TERM "PRINCIPAL" SHALL INCLUDE THE INCOME OF THE TRUST AT THE
TIME OF THE EXERCISE OF THE POWER THAT IS NOT CURRENTLY REQUIRED  TO  BE
DISTRIBUTED, INCLUDING ACCRUED AND ACCUMULATED INCOME.
  (9)  THE  TERM  "UNLIMITED  DISCRETION"  MEANS  THE UNLIMITED RIGHT TO
DISTRIBUTE PRINCIPAL THAT IS NOT MODIFIED IN ANY MANNER. A POWER TO  PAY
PRINCIPAL  THAT INCLUDES WORDS SUCH AS BEST INTERESTS, WELFARE, COMFORT,
OR HAPPINESS SHALL NOT BE CONSIDERED A LIMITATION OR MODIFICATION OF THE
RIGHT TO DISTRIBUTE PRINCIPAL.
  S 3. This act shall take effect immediately and shall apply to  trusts
whether created prior to or after such effective date.