MISSISSIPPI LEGISLATURE
2014 Regular Session
To: Judiciary, Division A
By: Senator(s) Tindell, Gollott
AN ACT TO CREATE THE MISSISSIPPI TRUST DECANTING ACT; TO DEFINE CERTAIN TERMS; TO PROVIDE FOR DISTRIBUTION TO A SECOND TRUST WHERE ABSOLUTE DISCRETION EXISTS; TO PROVIDE FOR DISTRIBUTION TO A SECOND TRUST WHERE NO ABSOLUTE DISCRETION EXISTS; TO PROVIDE FOR NOTICE; TO PROVIDE COURT INVOLVEMENT; TO PROVIDE THE TERM OF A SECOND TRUST; TO ADDRESS ASSETS AND DISTRIBUTION; TO ADDRESS PROHIBITIONS, RESTRICTIONS, TAX LIMITATIONS AND LIMITS ON COMPENSATION; TO PROVIDE REMEDIES; TO BRING FORWARD SECTION 91-9-107, MISSISSIPPI CODE OF 1972, FOR PURPOSES OF AMENDMENT; AND FOR RELATED PURPOSES;
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Short title. This chapter shall be known and may be cited as the Mississippi Trust Decanting Act.
SECTION 2. Definitions. In this chapter:
(a) "Absolute discretion" means the right to distribute principal that is not limited or modified in any manner to or for the benefit of one or more beneficiaries of the trust, whether or not the term "absolute" is used. A power to distribute principal that includes purposes such as best interests, welfare, or happiness shall constitute absolute discretion.
(b) "Authorized trustee" means an entity or individual, other than the settlor, a beneficiary, or a person who owes a duty of support to a beneficiary, who has authority under the terms of the first trust to distribute the principal of the trust for the benefit of one or more current beneficiaries.
(c) "Code" means the United States Internal Revenue Code of 1986, as amended from time to time, including corresponding provisions of subsequent internal revenue laws and corresponding provisions of state law.
(d) "Current beneficiary" means a person who is currently receiving or eligible to receive a distribution of principal or income from the trustee on the date of the exercise of the power.
(e) "Distribute" means the power to pay directly to the beneficiary of a trust or make application for the benefit of the beneficiary.
(f) "First trust" means an existing irrevocable inter vivos or testamentary trust part or all of the principal of which is distributed in further trust under Section 4 or 5 of this act.
(g) "Presumptive remainder beneficiary" means a beneficiary of a trust, as of the date of determination and assuming nonexercise of all powers of appointment, who either (i) would be eligible to receive a distribution of income or principal if the trust terminated on that date, or (ii) would be eligible to receive a distribution of income or principal if the interests of all beneficiaries currently eligible to receive income or principal from the trust ended on that date without causing the trust to terminate.
(h) "Principal" includes 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.
(i) "Second trust" means any irrevocable trust to which principal is distributed in accordance with Section 4 or 5 of this act.
(j) "Successor beneficiary" means any beneficiary other than the current beneficiaries, including remainder beneficiaries, but does not include a potential appointee of a power of appointment held by a beneficiary.
SECTION 3. Purpose. An authorized trustee who has discretion to make distributions to the beneficiaries shall exercise that discretion in the trustee's fiduciary capacity, whether the trustee's discretion is absolute or limited to ascertainable standards.
SECTION 4. Distribution to second trust if absolute discretion. An authorized trustee who has the absolute discretion to distribute the principal of a trust may, with or without court approval, distribute part or all of the principal of the trust in favor of a trustee of a second trust for the benefit of one or more of the current beneficiaries of the first trust and for the benefit of one or more of the successor beneficiaries of the first trust; provided, a beneficiary who has only a future beneficial interest, vested or contingent, in the first trust cannot have the future beneficial interest accelerated to a present interest in the second trust.
(a) If the authorized trustee exercises the power under this subsection, the authorized trustee may grant a power of appointment (including a presently exercisable power of appointment) in the second trust to one or more of the current beneficiaries of the first trust, provided that the beneficiary granted a power to appoint could receive the principal outright under the terms of the first trust.
(b) If the authorized trustee grants a power of appointment, the class of permissible appointees in favor of whom a beneficiary may exercise the power of appointment granted in the second trust may be broader than or otherwise different from the current and successor beneficiaries of the first trust.
(c) If the beneficiary or beneficiaries of the first trust are described as a class of persons, the beneficiary or beneficiaries of the second trust may include one or more persons of such class who become includible in the class after the distribution to the second trust.
SECTION 5. Distribution to second trust if no absolute discretion. An authorized trustee who has the power to distribute the principal of a trust but does not have the absolute discretion to distribute the principal of the trust may, with or without court approval, distribute part or all of the principal of the first trust in favor of a trustee of a second trust, provided that the current beneficiaries of the second trust shall be the same as the current beneficiaries of the first trust and the successor beneficiaries of the second trust shall be the same as the successor beneficiaries of the first trust.
(a) If the authorized trustee exercises the power under this section, the second trust shall include the same language authorizing the trustee to distribute the income or principal of a trust as set forth in the first trust.
(b) If the beneficiary or beneficiaries of the first trust are described as a class of persons, the beneficiary or beneficiaries of the second trust shall include all persons who become includible in the class after the distribution to the second trust.
(c) If the authorized trustee exercises the power under this section and if the first trust grants a power of appointment to a beneficiary of the trust, the second trust shall grant such power of appointment in the second trust and the class of permissible appointees shall be the same as in the first trust.
(d) Supplemental Needs Trusts.
(i) Notwithstanding the other provisions of this section, the authorized trustee may distribute part or all of the principal of a disabled beneficiary's interest in the first trust in favor of a trustee of a second trust which is a supplemental needs trust if the authorized trustee determines that to do so would be in the best interests of the disabled beneficiary.
(ii) Definitions. For purposes of this paragraph (d): "Best interests" of a disabled beneficiary include, without limitation, consideration of the financial impact to the disabled beneficiary's family. "Disabled beneficiary" means a current or successor beneficiary of the first trust who the authorized trustee determines has a disability that substantially impairs the beneficiary's ability to provide for his or her own care or custody and that constitutes a substantial handicap, whether or not the beneficiary has been adjudicated a "disabled person." "Governmental benefits" means financial aid or services from any state, federal, or other public agency. "Supplemental needs second trust" means a trust that complies with subparagraph (iii) of this paragraph (d) and that relative to the first trust contains either lesser or greater restrictions on the trustee's power to distribute trust income or principal and which the trustee believes would, if implemented, allow the disabled beneficiary to receive a greater degree of governmental benefits than the disabled beneficiary will receive if no distribution is made.
(iii) Remainder beneficiaries. A supplemental needs second trust may name successor beneficiaries other than the disabled beneficiary's estate, provided that the second trust names the same successor beneficiaries to the disabled beneficiary's interest, and in the same proportions, as exist in the first trust. In addition to the foregoing, where the first trust was created by the disabled beneficiary or the trust property has been distributed directly to or is otherwise under the control of the disabled beneficiary, the authorized trustee may distribute to a "pooled trust" as defined by federal Medicaid law for the benefit of the disabled beneficiary or the supplemental needs second trust must contain pay back provisions complying with Medicaid reimbursement requirements of federal law.
(iv) Reimbursement. A supplemental needs second trust shall not be liable to pay or reimburse the state or any public agency for financial aid or services to the disabled beneficiary except as provided in the supplemental needs second trust.
SECTION 6. Notice. An authorized trustee may exercise the power to distribute in favor of a second trust under Sections 4 and 5 without the consent of the settlor or the beneficiaries of the first trust and without court approval if there are one or more legally competent current beneficiaries and one or more legally competent presumptive remainder beneficiaries and the authorized trustee sends written notice of the trustee's decision, specifying the manner in which the trustee intends to exercise the power and the prospective effective date for the distribution, to all of the legally competent current beneficiaries and presumptive remainder beneficiaries, determined as of the date the notice is sent and assuming non exercise of all powers of appointment, not less than sixty (60) days prior the prospective effective date for the distribution ("notice period"). A trustee is not required to provide a copy of the notice to a beneficiary who is known to the trustee but who cannot be located by the trustee after reasonable diligence or who is not known to the trustee. If a charity is a current beneficiary or presumptive remainder beneficiary of the trust, the notice shall also be given to the Mississippi Secretary of State. If all persons to whom notice is otherwise required to be sent under this section waive the notice period by a signed written instrument delivered to the authorized trustee, the authorized trustee's power to distribute in favor of a second trust under Section 4 or 5 of this act shall be exercisable after notice is waived by all such persons, notwithstanding the effective date of the distribution.
SECTION 7. Court involvement. The trustee may for any reason, in its sole discretion, elect to petition the court to order the distribution, including, without limitation, the reason that the trustee's exercise of the power to distribute under this act is unavailable because, for instance, there are no legally competent current beneficiaries or legally competent presumptive remainder beneficiaries. The settlor or a trustee, cotrustee, trust protector, trust advisor, beneficiary or beneficiaries (including the legal guardian or conservator of a legally incompetent beneficiary) may commence a proceeding to approve or disapprove of a proposed exercise of the authorized trustee's power to distribute in favor of a second trust under Section 4 or 5 of this act. The authorized trustee's notice under Section 6 of this act shall not limit the right of any beneficiary to bring an action seeking relief as otherwise provided in Section 21 of this act. In any action under this section, the persons entitled to receive the notice under Section 6 of this act, if any, shall be made parties, and they shall be the only necessary parties. If no such persons exist, then all interested parties shall be made parties to such proceedings.
SECTION 8. Term of the second trust. The second trust to which an authorized trustee distributes the assets of the first trust may have a term that is longer than the term set forth in the first trust, including, but not limited to, a term measured by the lifetime of a current beneficiary; provided, however, that the second trust shall be limited to the same permissible period of the rule against perpetuities that applied to the first trust, unless the first trust expressly permits the trustee to extend or lengthen its perpetuities period.
SECTION 9. Divided discretion. If an authorized trustee has absolute discretion to distribute the principal of a trust and the same trustee or another trustee has the power to distribute principal under the trust instrument, which power is not absolute discretion, such authorized trustee having absolute discretion may exercise the power to distribute under Section 4 of this act.
SECTION 10. Later discovered assets. To the extent the authorized trustee does not provide otherwise the distribution of some or all of the assets comprising the principal of the first trust in favor of a second trust shall not be deemed to include subsequently discovered assets otherwise belonging to the first trust and undistributed principal paid to or acquired by the first trust subsequent to the distribution in favor of the second trust.
SECTION 11. Other authority to distribute in further trust. This act shall not be construed to abridge the right of any trustee to distribute property in further trust that arises under the terms of the governing instrument of a trust, any provision of applicable law, or a court order.
SECTION 12. Need to distribute not required. An authorized trustee may exercise the power to distribute in favor of a second trust under Sections 4 and 5 of this act whether or not there is a current need to distribute principal under the terms of the first trust.
SECTION 13. No duty to distribute. Nothing in this act is intended to create or imply a duty to exercise a power to distribute principal, and no inference of impropriety shall be made as a result of an authorized trustee not exercising the power conferred under Section 4 or 5 of this act. Notwithstanding any other provision of this act, a trustee has no duty to inform beneficiaries about the availability of this act and no duty to review the trust to determine whether any action should be taken under this act.
SECTION 14. Express prohibition. A power authorized by Section 4 or 5 of this act may not be exercised if expressly prohibited by the terms of the governing instrument, and for trusts created after the effective date of this act, by making specific reference to this act, but a general prohibition of the amendment or revocation of the first trust or a provision that constitutes a spendthrift clause shall not preclude the exercise of a power under Section 4 or 5 of this act.
SECTION 15. Restrictions. An authorized trustee may not exercise a power authorized by Section 4 or 5 of this act to affect any of the following:
(a) 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 beneficiary, except with respect to a second trust which is a Supplemental Needs Trust unless the exercise of such power would subject the second trust to claims of reimbursement by any private or governmental body or would interfere with, reduce the amount of, or jeopardize an individual's entitlement to government benefits;
(b) To decrease or indemnify against a trustee's liability or exonerate a trustee from liability for failure to exercise reasonable care, diligence, and prudence; except to indemnify or exonerate one (1) party from liability for actions of another party with respect to distribution that unbundles the governance structure of a trust to divide and separate fiduciary and nonfiduciary responsibilities among several parties, including, without limitation, one or more trustees, distribution advisors, investment advisors, trust protectors, or other parties, provided, however, that such modified governance structure may reallocate fiduciary responsibilities from one (1) party to another but may not reduce them;
(c) To eliminate a provision granting another person the right to remove or replace the authorized trustee exercising the power under Section 4 or 5 of this act; provided, however, such person's right to remove or replace the authorized trustee may be eliminated if a separate, independent, nonsubservient individual or entity, such as a trust protector, acting in a nonfiduciary capacity has the right to remove or replace the authorized trustee;
(d) To reduce, limit or modify the perpetuities provision specified in the first trust in the second trust, unless the first trust expressly permits the trustee to do so.
SECTION 16. Tax limitations. If any contribution to the first trust qualified for the annual exclusion under Section 2503(b) of the Code, the marital deduction under Section 2056(a) or 2523(a) of the Code, or the charitable deduction under Section 170(a), 642(c), 2055(a) or 2522(a) of the Code, is a direct skip qualifying for treatment under Section 2642(c) of the Code, or qualified for any other specific tax benefit that would be lost by the existence of the authorized trustee's authority under Section 4 or 5 of this act for income, gift, estate, or generation skipping transfer tax purposes under the Code, then the authorized trustee shall not have the power to distribute the principal of a trust pursuant to Section 4 or 5 of this act in a manner that would prevent the contribution to the first trust from qualifying for or would reduce the exclusion, deduction, or other tax benefit that was originally claimed with respect to that contribution.
(a) Notwithstanding the provisions of this section, the authorized trustee may exercise the power to pay the first trust to a trust as to which the settlor of the first trust is not considered the owner under Subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of the Code even if the settlor is considered such owner of the first trust. Nothing in this section shall be construed as preventing the authorized trustee from distributing part or all of the first trust to a second trust that is a trust as to which the settlor of the first trust is considered the owner under Subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of the Code.
(b) During any period when the first trust owns subchapter S corporation stock, an authorized trustee may not exercise a power authorized by Section 4 or 5 of this act to distribute part or all of the S corporation stock to a second trust that is not a permitted shareholder under Section 1361(c)(2) of the Code.
(c) During any period when the first trust owns an interest in property subject to the minimum distribution rules of Section 401(a)(9) of the Code, an authorized trustee may not exercise a power authorized by Section 4 or 5 of this act to distribute part or all of the interest in such property to a second trust that would result in the shortening of the minimum distribution period to which the property is subject in the first trust.
SECTION 17. Limits on compensation of trustee. (1) Unless the court upon application of the trustee directs otherwise, an authorized trustee may not exercise a power authorized by Section 4 or 5 of this act solely to change the provisions regarding the determination of the compensation of any trustee; provided, however, an authorized trustee may exercise the power authorized in Section 4 or 5 of this act in conjunction with other valid and reasonable purposes to bring the trustee's compensation into accord with reasonable limits in accord with Mississippi law in effect at the time of the exercise.
(2) The compensation payable to the trustee or trustees of the first trust may continue to be paid to the trustees of the second trust during the terms of the second trust and may be determined in the same manner as otherwise would have applied in the first trust; provided, however, that no trustee shall receive any commission or other compensation imposed upon assets distributed due to the distribution of property from the first trust to a second trust pursuant to Section 4 or 5 of this act.
SECTION 18. Written instrument. The exercise of a power to distribute principal under Section 4 or 5 of this act must be made by an instrument in writing, signed and acknowledged by the trustee, and filed with the records of the first trust and the second trust.
SECTION 19. Terms of second trust. Any reference to the governing instrument or terms of the governing instrument in this act includes the terms of a second trust established in accordance with this act.
SECTION 20. Settlor. The settlor of a first trust is considered for all purposes to be the settlor of any second trust established in accordance with this act. If the settlor of a first trust is not also the settlor of a second trust, then the settlor of the first trust shall be considered the settlor of the second trust, but only with respect to the portion of second trust distributed from the first trust in accordance with this act.
SECTION 21. Remedies. A trustee who reasonably and in good faith takes or omits to take any action under this act is not liable to any person interested in the trust. An act or omission by a trustee under this act is presumed taken or omitted reasonably and in good faith unless it is determined by the court to have been an abuse of discretion. If a trustee reasonably and in good faith takes or omits to take any action under this act and a person interested in the trust opposes this act or omission, the person's exclusive remedy is to obtain an order of the court directing the trustee to exercise authority in accordance with this act in such manner as the court determines necessary or helpful for the proper functioning of the trust, including without limitation, prospectively to modify or reverse a prior exercise of such authority. Any claim by any person interested in the trust that an act or omission by a trustee under this act was an abuse of discretion is barred if not asserted in a proceeding commenced by or on behalf of the person within two (2) years after the trustee has sent to the person or the person's personal representative a notice or report in writing sufficiently disclosing facts fundamental to the claim such that the person knew or reasonably should have known of the claim. The preceding sentence shall not apply to a person who was under a legal disability at the time the notice or report was sent and who then had no personal representative. For purposes of this section, a personal representative refers to a court appointed guardian or conservator of the estate of a person.
SECTION 22. Application. Except as otherwise provided in this section, this act applies to trusts created before, on, or after the effective date of this act. This act applies to any trust governed by the laws of the State of Mississippi, including a trust whose principal place of administration is transferred to this state before or after the effective date of this act, unless:
(a) With respect to a trust created on or after the effective date of this act, the governing instrument expressly prohibits use of this act by specific reference to this act; or
(b) With respect to a trust created prior to the effective date of this act, the governing instrument expressly prohibits the use of decanting by specific reference thereto.
SECTION 23. Section 91-9-107, Mississippi Code of 1972, is brought forward as follows:
91-9-107. (1) From time of creation of the trust until final distribution of the assets of the trust, a trustee has the power to perform, without court authorization, every act which a prudent investor would perform for the purposes of the trust, including, but not limited to:
(a) The powers specified in subsection (3) of this section, and
(b) Those powers, rights and remedies set forth in Section 91-9-9, related to compliance with environmental laws affecting property held by fiduciaries.
(2) In the exercise of his powers, including the powers granted by this article, a trustee has a duty to act with due regard to his obligation as a fiduciary.
(3) A trustee has the power, subject to subsections (1) and (2):
(a) To collect, hold and retain trust assets received from a trustor until, in the judgment of the trustee, disposition of the assets should be made; and the assets may be retained even though they include an asset in which the trustee is personally interested;
(b) To receive additions to the assets of the trust;
(c) To continue or participate in the operation of any business or other enterprise, and to effect incorporation, dissolution or other change in the form of the organization of the business or enterprise;
(d) To acquire an undivided interest in a trust asset in which the trustee, in any trust capacity, holds an undivided interest;
(e) To invest and reinvest trust assets in accordance with the provisions of the trust or as provided by law;
(f) To deposit trust funds in a bank, including a bank operated by the trustee;
(g) To acquire or dispose of an asset, for cash or on credit, at public or private sale; and to manage, develop, improve, exchange, partition, change the character of, or abandon a trust asset or any interest therein; and to encumber, mortgage or pledge a trust asset for a term within or extending beyond the term of the trust, in connection with the exercise of any power vested in the trustee;
(h) To make ordinary or extraordinary repairs or alterations in buildings, improvements or other structures; to demolish any improvements; to raze existing or erect new party walls, buildings or improvements;
(i) To subdivide, develop or dedicate land to public use; or to make or obtain the vacation of plats and adjust boundaries; or to adjust differences in valuation on exchange or partition by giving or receiving consideration; or to dedicate easements to public use without consideration;
(j) To enter for any purpose into a lease as lessor or lessee with or without option to purchase or renew for a term within or extending beyond the term of the trust;
(k) To enter into a lease or arrangement for exploration and removal of minerals or other natural resources, or enter into a pooling or unitization agreement;
(l) To grant an option involving disposition of a trust asset, or to take an option for the acquisition of any asset;
(m) To vote a security, in person or by general or limited proxy;
(n) To pay calls, assessments and any other sums chargeable or accruing against or on account of securities;
(o) To sell or exercise stock subscription or conversion rights; to consent, directly or through a committee or other agent, to the reorganization, consolidation, merger, dissolution or liquidation of a corporation or other business enterprise;
(p) To hold a security in the name of a nominee or in other form without disclosure of the trust, so that title to the security may pass by delivery, but the trustee is liable for any act of the nominee in connection with the stock so held;
(q) To insure the assets of the trust against damage or loss, and the trustee against liability with respect to third persons;
(r) To borrow money to be repaid from trust assets or otherwise; to advance money for the protection of the trust and for all expenses, losses and liability sustained in the administration of the trust or because of the holding or ownership of any trust assets, for which advances with any interest the trustee has a lien on the trust assets as against the beneficiary;
(s) To pay or contest any claim; to settle a claim by or against the trust by compromise, arbitration or otherwise; and to release, in whole or in part, any claim belonging to the trust to the extent that the claim is uncollectible;
(t) To pay taxes, assessments, compensation of the trustee, and other expenses incurred in the collection, care, administration and protection of the trust;
(u) To allocate items of income or expense to either trust income or principal, as provided by law, including creation of reserves out of income for depreciation, obsolescence or amortization, or for depletion in mineral or timber properties;
(v) To pay any sum distributable to a beneficiary under legal disability, without liability to the trustee, by paying the sum to the beneficiary or by using same for his benefit or by paying the sum for the use of the beneficiary either to a legal representative appointed by the court, or if none, to a relative or to an adult person with whom beneficiary is residing, who is believed to be reliable by trustee;
(w) To effect distribution of property and money in divided or undivided interests and to adjust resulting differences in valuation;
(x) To employ persons, including attorneys, auditors, investment advisors or agents, even if they are associated with the trustee, to advise or assist the trustee in the performance of his administrative duties; to act without independent investigation upon their recommendations; and instead of acting personally, to employ one or more agents to perform any act of administration, whether or not discretionary;
(y) To prosecute or defend actions, claims or proceedings for the protection of trust assets and of the trustee in the performance of his duties;
(z) To execute and deliver all instruments which will accomplish or facilitate the exercise of the powers vested in the trustee.
(4) If a trustee has determined that either (a) the market value of a trust is less than One Hundred Fifty Thousand Dollars ($150,000.00) and that, in relation to the costs of administration of the trust, the continuance of the trust pursuant to its existing terms will defeat or substantially impair the accomplishment of the purposes of the trust; or (b) the trust no longer has a legitimate purpose or that its purpose is being thwarted with respect to any trust in any amount; then the trustee may seek court approval to terminate the trust and the court, in its discretion, may approve such termination. In such a case, the court may provide for the distribution of trust property, including principal and undistributed income, to the beneficiaries in a manner which conforms as nearly as possible to the intention of the settlor and the court shall make appropriate provisions for the appointment of a guardian in the case of a minor beneficiary.
(5) (a) Unless expressly provided to the contrary in the trust instrument, a trustee may consolidate two (2) or more trusts having substantially similar terms into a single trust; divide on a fractional basis a single trust into two (2) or more separate trusts for any reason; and may segregate by allocation to a separate account or trust a specific amount from, a portion of, or a specific asset included in the trust property of any trust to reflect a disclaimer, to reflect or result in differences in federal tax attributes, to satisfy any federal tax requirement, to make federal tax elections, to reduce potential generation-skipping transfer tax liability, or for any other tax planning purposes or other reasons.
(b) A separate trust created by severance or segregation must be treated as a separate trust for all purposes from the effective date in which the severance or segregation is effective. The effective date of the severance or segregation may be retroactive. In managing, investing, administering and distributing the trust property of any separate account or trust and in making applicable tax elections, the trustee may consider the differences in federal tax attributes and all other factors the trustee believes pertinent and may make disproportionate distributions from the separate trusts or accounts created.
(c) A trust or account created by consolidation, severance or segregation under this subsection (5) must be held on terms and conditions that are substantially equivalent to the terms of the trust before consolidation, severance or segregation so that the aggregate interests of each beneficiary are substantially equivalent to the beneficiary's interests in the trust or trusts before consolidation, severance or segregation. In determining whether a beneficiary's aggregate interests are substantially equivalent, the trustee shall consider the economic value of those interests to the extent they can be valued, considering actuarial factors as appropriate. If a beneficiary's interest cannot be valued with any reasonable degree of certainty because of the nature of the trust property, the terms of the trust, or other reasons, the trustee shall base the determination upon such other factors as are reasonable and appropriate under the facts and circumstances applicable to that particular trust, including the purposes of the trust. Provided, however, the terms of any trust before consolidation, severance or segregation which permit qualification of that trust for an applicable federal tax deduction, exclusion, election, exemption, or other special federal tax status must remain identical in the consolidated trust or in each of the separate trusts or accounts created by severance or segregation.
(d) A trustee who acts in good faith is not liable to any person for taking into consideration differences in federal tax attributes and other pertinent factors in administering trust property of any separate account or trust, in making tax elections, and making distributions pursuant to the terms of the separate trust.
(e) Income earned on a consolidated or severed or segregated amount, portion, or specific asset after the consolidation or severance is effective passes with that amount, portion or specific asset.
(f) This subsection (5) applies to all trusts whenever created, whether before, on, or after July 1, 2001, and whether such trusts are inter vivos or testamentary, are created by the same or different instruments, by the same or different persons and regardless of where created or administered.
(g) This subsection (5) does not limit the right of a trustee acting in accordance with the applicable provisions of the governing instrument to divide or consolidate trusts.
(h) Nothing contained in this subsection (5) shall be construed as granting to any trustee a general power of appointment over any trust not otherwise expressly granted in the trust instrument.
SECTION 24. This act shall take effect and be in force from and after July 1, 2014.