Stricken language would be deleted from and underlined language would be added to present law.
Act 680 of the Regular Session
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1749 3
4
By: Representative M. Brown 5
By: Senator Dees 6
7
For An Act To Be Entitled 8
AN ACT TO ADOPT THE UNIFORM TRUST DECANTING ACT; AND 9
FOR OTHER PURPOSES. 10
11
12
Subtitle 13
TO ADOPT THE UNIFORM TRUST DECANTING 14
ACT. 15
16
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 17
18
SECTION 1. Arkansas Code Title 28 is amended to add an additional 19
chapter to read as follows: 20
21
CHAPTER 78 22
UNIFORM TRUST DECANTING ACT 23
24
28-78-101. Short title. 25
This chapter may be cited as the Uniform Trust Decanting Act. 26
27
28-78-102. Definitions. 28
In this chapter: 29
(1) “Appointive property” means the property or property 30
interest subject to a power of appointment; 31
(2) “Ascertainable standard” means a standard relating to an 32
individual’s health, education, support, or maintenance within the meaning of 33
26 U.S.C. Section 2041(b)(1)(A), as it existed on January 1, 2025, or 26 34
U.S.C. Section 2514(c)(1), as it existed on January, 1, 2025, and any 35
applicable regulations; 36 HB1749
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(3) “Authorized fiduciary” means: 1
(A) A trustee or other fiduciary, other than a settlor, 2
that has discretion to distribute or direct a trustee to distribute part or 3
all of the principal of the first trust to one or more current beneficiaries; 4
(B) A special fiduciary appointed under § 28 -78-109; or 5
(C) A special-needs fiduciary under § 28 -78-113; 6
(4) “Beneficiary” means a person that: 7
(A) Has a present or future, vested or contingent, 8
beneficial interest in a trust; 9
(B) Holds a power of appointment over trust property; or 10
(C) Is an identified charitable organization that will or 11
may receive distributions under the terms of the trust; 12
(5) “Charitable interest” means an interest in a trust which: 13
(A) Is held by an identified charitable organization and 14
makes the organization a qualified beneficiary; 15
(B) Benefits only charitable organizations and, if the 16
interest were held by an identified charitable organization, would make the 17
organization a qualified beneficiary; or 18
(C) Is held solely for charitable purposes and, if the 19
interest were held by an identified charitable organization, would make the 20
organization a qualified beneficiary; 21
(6) “Charitable organization” means: 22
(A) A person, other than an individual, organized and 23
operated exclusively for charitable purposes; or 24
(B) A government or governmental subdivision, agency, or 25
instrumentality, to the extent it holds funds exclusively for a charitable 26
purpose; 27
(7) “Charitable purpose” means the relief of poverty, the 28
advancement of education or religion, the promotion of health, a municipal or 29
other governmental purpose, or another purpose the achievement of which is 30
beneficial to the community; 31
(8) “Court” means the court in this state having jurisdiction in 32
matters relating to trusts; 33
(9)(A) “Current beneficiary” means a beneficiary that on the 34
date the beneficiary’s qualification is determined is a distributee or 35
permissible distributee of trust income or principal. 36 HB1749
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(B) "Current beneficiary" includes the holder of a 1
presently exercisable general power of appointment but does not include a 2
person that is a beneficiary only because the person holds any other power of 3
appointment; 4
(10) “Decanting power” or “the decanting power” means the power 5
of an authorized fiduciary under this chapter to distribute property of a 6
first trust to one or more second trusts or to modify the terms of the first 7
trust; 8
(11) “Expanded distributive discretion” means a discretionary 9
power of distribution that is not limited to an ascertainable standard or a 10
reasonably definite standard; 11
(12) “First trust” means a trust over which an authorized 12
fiduciary may exercise the decanting power; 13
(13) “First-trust instrument” means the trust instrument for a 14
first trust; 15
(14) “General power of appointment” means a power of appointment 16
exercisable in favor of a powerholder, the powerholder’s estate, a creditor 17
of the powerholder, or a creditor of the powerholder’s estate; 18
(15) “Jurisdiction”, with respect to a geographic area, includes 19
a state or country; 20
(16) “Person” means an individual, estate, business or nonprofit 21
entity, public corporation, government or governmental subdivision, agency, 22
or instrumentality, or other legal entity; 23
(17)(A) “Power of appointment” means a power that enables a 24
powerholder acting in a nonfiduciary capacity to designate a recipient of an 25
ownership interest in or another power of appointment over the appointive 26
property. 27
(B) "Power of appointment" does not include a power of 28
attorney; 29
(18) “Powerholder” means a person in which a donor creates a 30
power of appointment; 31
(19)(A) “Presently exercisable power of appointment” means a 32
power of appointment exercisable by the powerholder at the relevant time. 33
(B) "Presently exercisable power of appointment": 34
(1) Includes a power of appointment exercisable only 35
after the occurrence of a specified event, the satisfaction of an 36 HB1749
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ascertainable standard, or the passage of a specified time only after the: 1
(i) Occurrence of the specified event; 2
(ii) Satisfaction of the ascertainable 3
standard; or 4
(iii) Passage of the specified time; and 5
(2) Does not include a power exercisable only at the 6
powerholder’s death; 7
(20) “Qualified beneficiary” means a beneficiary that on the 8
date the beneficiary’s qualification is determined: 9
(A) Is a distributee or permissible distributee of trust 10
income or principal; 11
(B) Would be a distributee or permissible distributee of 12
trust income or principal if the interests of the distributees described in 13
subdivision (20)(A) of this section terminated on that date without causing 14
the trust to terminate; or 15
(C) Would be a distributee or permissible distributee of 16
trust income or principal if the trust terminated on that date; 17
(21) “Reasonably definite standard” means a clearly measurable 18
standard under which a holder of a power of distribution is legally 19
accountable within the meaning of 26 U.S.C. Section 674(b)(5)(A), as is 20
existed on January 1, 2025, and any applicable regulations; 21
(22) “Record” means information that is inscribed on a tangible 22
medium or that is stored in an electronic or other medium and is retrievable 23
in perceivable form; 24
(23) “Second trust” means a: 25
(A) First trust after modification under this chapter; or 26
(B) Trust to which a distribution of property from a first 27
trust is or may be made under this chapter; 28
(24) “Second-trust instrument” means the trust instrument for a 29
second trust; 30
(25)(A) “Settlor”, except as otherwise provided in § 28 -78-125, 31
means a person, including a testator, that creates or contributes property to 32
a trust. 33
(B) If more than one person creates or contributes 34
property to a trust, each person is a settlor of the portion of the trust 35
property attributable to the person’s contribution except to the extent 36 HB1749
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another person has power to revoke or withdraw that portion; 1
(26) “Sign” means, with present intent to authenticate or adopt 2
a record to: 3
(A) Execute or adopt a tangible symbol; or 4
(B) Attach to or logically associate with the record an 5
electronic symbol, sound, or process; 6
(27) “State” means a state of the United States, the District of 7
Columbia, Puerto Rico, the United States Virgin Islands, or any territory or 8
insular possession subject to the jurisdiction of the United States; 9
(28) “Terms of the trust” means: 10
(A) Except as otherwise provided in subdivision (28)(B) of 11
this section, the manifestation of the settlor’s intent regarding a trust’s 12
provisions as: 13
(i) Expressed in the trust instrument; or 14
(ii) Established by other evidence that would be 15
admissible in a judicial proceeding; or 16
(B) The trust’s provisions as established, determined, or 17
amended by a: 18
(i) Trustee or other person in accordance with 19
applicable law; 20
(ii) Court order; or 21
(iii) Nonjudicial settlement agreement under § 28 -22
73-111; and 23
(29) “Trust instrument” means a record executed by the settlor 24
to create a trust or by any person to create a second trust which contains 25
some or all of the terms of the trust, including any amendments. 26
27
28-78-103. Scope. 28
(a) Except as otherwise provided in subsections (b) and (c) of this 29
section, this chapter applies to an express trust that is irrevocable or 30
revocable by the settlor only with the consent of the trustee or a person 31
holding an adverse interest. 32
(b) This chapter does not apply to a trust held solely for charitable 33
purposes. 34
(c) Subject to § 28-78-115, a trust instrument may restrict or 35
prohibit exercise of the decanting power. 36 HB1749
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(d) This chapter does not limit the power of a trustee, powerholder, 1
or other person to distribute or appoint property in further trust or to 2
modify a trust under the trust instrument, law of this state other than this 3
act, common law, a court order, or a nonjudicial settlement agreement. 4
(e) This chapter does not affect the ability of a settlor to provide 5
in a trust instrument for the distribution of the trust property or 6
appointment in further trust of the trust property or for modification of the 7
trust instrument. 8
9
28-78-104. Fiduciary duty. 10
(a) In exercising the decanting power, an authorized fiduciary shall 11
act in accordance with its fiduciary duties, including the duty to chapter in 12
accordance with the purposes of the first trust. 13
(b) This chapter does not create or imply a duty to exercise the 14
decanting power or to inform beneficiaries about the applicability of this 15
act. 16
(c) Except as otherwise provided in a first -trust instrument, for 17
purposes of this chapter and § 28 -73-802 and § 28-73-803, the terms of the 18
first trust are deemed to include the decanting power. 19
20
28-78-105. Application - Governing law. 21
This chapter applies to a trust created before, on, or after the 22
effective date of this chapter which: 23
(1) Has its principal place of administration in this state, 24
including a trust whose principal place of administration has been changed to 25
this state; or 26
(2) Provides by its trust instrument that it is governed by the 27
law of this state or is governed by the law of this state for the purpose of: 28
(A) Administration, including administration of a trust 29
whose governing law for purposes of administration has been changed to the 30
law of this state; 31
(B) Construction of terms of the trust; or 32
(C) Determining the meaning or effect of terms of the 33
trust. 34
35
28-78-106. Reasonable reliance. 36 HB1749
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A trustee or other person that reasonably relies on the validity of a 1
distribution of part or all of the property of a trust to another trust, or a 2
modification of a trust, under this chapter, law of this state other than 3
this chapter, or the law of another jurisdiction is not liable to any person 4
for any action or failure to act as a result of the reliance. 5
6
28-78-107. Notice - Exercise of decanting power. 7
(a) In this section, a notice period begins on the day notice is given 8
under subsection (c) of this section and ends fifty -nine (59) days after the 9
day notice is given. 10
(b) Except as otherwise provided in this chapter, an authorized 11
fiduciary may exercise the decanting power without the consent of any person 12
and without court approval. 13
(c) Except as otherwise provided in subsection (f) of this section, an 14
authorized fiduciary shall give notice in a record of the intended exercise 15
of the decanting power not later than sixty (60) days before the exercise to: 16
(1) Each settlor of the first trust, if living or then in 17
existence; 18
(2) Each qualified beneficiary of the first trust; 19
(3) Each holder of a presently exercisable power of appointment 20
over any part or all of the first trust; 21
(4) Each person that currently has the right to remove or 22
replace the authorized fiduciary; 23
(5) Each other fiduciary of the first trust; 24
(6) Each fiduciary of the second trust; and 25
(7) The Attorney General, if § 28 -78-114(b) applies. 26
(d) An authorized fiduciary is not required to give notice under 27
subsection (c) of this section to a: 28
(1) Qualified beneficiary who is a minor and has no 29
representative; or 30
(2) Person that is not known to the fiduciary or is known to the 31
fiduciary but cannot be located by the fiduciary after reasonable diligence. 32
(e) A notice under subsection (c) of this section shall: 33
(1) Specify the manner in which the authorized fiduciary intends 34
to exercise the decanting power; 35
(2) Specify the proposed effective date for exercise of the 36 HB1749
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power; 1
(3) Include a copy of the first -trust instrument; and 2
(4) Include a copy of all second -trust instruments. 3
(f) The decanting power may be exercised before expiration of the 4
notice period under subsection (a) of this section if all persons entitled to 5
receive notice waive the period in a signed record. 6
(g) The receipt of notice, waiver of the notice period, or expiration 7
of the notice period does not affect the right of a person to file an 8
application under Arkansas Code § 28 -78-109 asserting that: 9
(1) An attempted exercise of the decanting power is ineffective 10
because it did not comply with this chapter or was an abuse of discretion or 11
breach of fiduciary duty; or 12
(2) § 28-78-122 applies to the exercise of the decanting power. 13
(h) An exercise of the decanting power is not ineffective because of 14
the failure to give notice to one or more persons under subsection (c) of 15
this section if the authorized fiduciary acted with reasonable care to comply 16
with subsection (c) of this section. 17
18
28-78-108. Representation. 19
(a) Notice to a person with authority to represent and bind another 20
person under a first -trust instrument or § 28 -73-301 et seq., has the same 21
effect as notice given directly to the person represented. 22
(b) Consent of or waiver by a person with authority to represent and 23
bind another person under a first -trust instrument or § 28 -73-301 et seq., is 24
binding on the person represented unless the person represented objects to 25
the representation before the consent or waiver otherwise would become 26
effective. 27
(c) A person with authority to represent and bind another person under 28
a first-trust instrument or § 28 -73-301 et seq., may file an application 29
under § 28-78-109 on behalf of the person represented. 30
(d) A settlor shall not represent or bind a beneficiary under this 31
chapter. 32
33
28-78-109. Court involvement. 34
(a) On application of an authorized fiduciary, a person entitled to 35
notice under § 28-78-107(c), a beneficiary, or with respect to a charitable 36 HB1749
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interest the Attorney General or other person that has standing to enforce 1
the charitable interest, the court may: 2
(1) Provide instructions to the authorized fiduciary regarding 3
whether a proposed exercise of the decanting power is permitted under this 4
chapter and consistent with the fiduciary duties of the authorized fiduciary; 5
(2) Appoint a special fiduciary and authorize the special 6
fiduciary to determine whether the decanting power should be exercised under 7
this chapter and to exercise the decanting power; 8
(3) Approve an exercise of the decanting power; 9
(4) Determine that a proposed or attempted exercise of the 10
decanting power is ineffective because: 11
(A) After applying § 28 -78-122, the proposed or attempted 12
exercise does not or did not comply with this chapter; or 13
(B) The proposed or attempted exercise would be or was an 14
abuse of the fiduciary’s discretion or a breach of fiduciary duty; 15
(5) Determine the extent to which Arkansas Code § 28 -78-122 16
applies to a prior exercise of the decanting power; 17
(6) Provide instructions to the trustee regarding the 18
application of § 28-78-122 to a prior exercise of the decanting power; or 19
(7) Order other relief to carry out the purposes of this chapter 20
(b) On application of an authorized fiduciary, the court may approve: 21
(1) An increase in the fiduciary’s compensation under § 28 -78-22
116; or 23
(2) A modification under § 28 -778-118 of a provision granting a 24
person the right to remove or replace the fiduciary. 25
26
28-78-110. Formalities. 27
(a) An exercise of the decanting power shall be made in a record 28
signed by an authorized fiduciary. 29
(b) The signed record shall, directly or by reference to the notice 30
required by § 28-78-107, identify the first trust and the second trust or 31
trusts and state the property of the first trust being distributed to each 32
second trust and the property, if any, that remains in the first trust. 33
34
28-78-111. Decanting power under expanded distributive discretion. 35
(a) In this section: 36 HB1749
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(1)(A) “Noncontingent right” means a right that is not subject 1
to the exercise of discretion or the occurrence of a specified event that is 2
not certain to occur. 3
(B) "Noncontingent right" does not mean a right held by a 4
beneficiary if a person has discretion to distribute property subject to the 5
right to a person other than the beneficiary or the beneficiary’s estate; 6
(2) “Presumptive remainder beneficiary” means a qualified 7
beneficiary other than a current beneficiary; 8
(3)(A) “Successor beneficiary” means a beneficiary that is not 9
a qualified beneficiary on the date the beneficiary’s qualification is 10
determined. 11
(B) "Successor beneficiary" does not mean a person that is 12
a beneficiary only because the person holds a nongeneral power of 13
appointment; and 14
(4) “Vested interest” means a: 15
(A) Right to a mandatory distribution that is a 16
noncontingent right as of the date of the exercise of the decanting power; 17
(B) Current and noncontingent right, annually or more 18
frequently, to a mandatory distribution of income, a specified dollar amount, 19
or a percentage of value of some or all of the trust property; 20
(C) Current and noncontingent right, annually or more 21
frequently, to withdraw income, a specified dollar amount, or a percentage of 22
value of some or all of the trust property; 23
(D) Presently exercisable general power of appointment; or 24
(E) Right to receive an ascertainable part of the trust 25
property on the trust’s termination which is not subject to the exercise of 26
discretion or to the occurrence of a specified event that is not certain to 27
occur. 28
(b) Subject to subsection (c) of this section and Arkansas Code § 28 -29
78-114, an authorized fiduciary that has expanded distributive discretion 30
over the principal of a first trust for the benefit of one or more current 31
beneficiaries may exercise the decanting power over the principal of the 32
first trust. 33
(c) Subject to § 28 -78-113, in an exercise of the decanting power 34
under this section, a second trust shall not: 35
(1) Include as a current beneficiary a person that is not a 36 HB1749
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current beneficiary of the first trust, except as otherwise provided in 1
subsection (d) of this section; 2
(2) Include as a presumptive remainder beneficiary or successor 3
beneficiary a person that is not a current beneficiary, presumptive remainder 4
beneficiary, or successor beneficiary of the first trust, except as otherwise 5
provided in subsection (d) of this section; or 6
(3) Reduce or eliminate a vested interest. 7
(d) Subject to subdivision (c)(3) of this section and § 28 -78-114, in 8
an exercise of the decanting power under this section, a second trust may be 9
a trust created or administered under the law of any jurisdiction and may: 10
(1) Retain a power of appointment granted in the first trust; 11
(2) Omit a power of appointment granted in the first trust, 12
other than a presently exercisable general power of appointment; 13
(3) Create or modify a power of appointment if the powerholder 14
is a current beneficiary of the first trust and the authorized fiduciary has 15
expanded distributive discretion to distribute principal to the beneficiary; 16
and 17
(4) Create or modify a power of appointment if the powerholder 18
is a presumptive remainder beneficiary or successor beneficiary of the first 19
trust, but the exercise of the power may take effect only after the 20
powerholder becomes, or would have become if then living, a current 21
beneficiary. 22
(e)(1) A power of appointment described in subdivision (d)(1) through 23
(4) of this section may be general or nongeneral. 24
(2) The class of permissible appointees in favor of which the 25
power may be exercised may be broader than or different from the 26
beneficiaries of the first trust. 27
(f) If an authorized fiduciary has expanded distributive discretion 28
over part but not all of the principal of a first trust, the fiduciary may 29
exercise the decanting power under this section over that part of the 30
principal over which the authorized fiduciary has expanded distributive 31
discretion. 32
33
28-78-112. Decanting power under limited distributive discretion. 34
(a) In this section, “limited distributive discretion” means a 35
discretionary power of distribution that is limited to an ascertainable 36 HB1749
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standard or a reasonably definite standard. 1
(b) An authorized fiduciary that has limited distributive discretion 2
over the principal of the first trust for benefit of one or more current 3
beneficiaries may exercise the decanting power over the principal of the 4
first trust. 5
(c)(1) Under this section and subject to § 28 -78-114, a second trust 6
may be created or administered under the law of any jurisdiction. 7
(2) Under this section, the second trusts, in the aggregate, 8
shall grant each beneficiary of the first trust beneficial interests which 9
are substantially similar to the beneficial interests of the beneficiary in 10
the first trust. 11
(d)(1) A power to make a distribution under a second trust for the 12
benefit of a beneficiary who is an individual is substantially similar to a 13
power under the first trust to make a distribution directly to the 14
beneficiary. 15
(2) A distribution is for the benefit of a beneficiary if the: 16
(A) Distribution is applied for the benefit of the 17
beneficiary; 18
(B) Beneficiary is under a legal disability or the trustee 19
reasonably believes the beneficiary is incapacitated, and the distribution is 20
made as permitted under the Arkansas Trust Code, § 28 -73-101 et seq.; or 21
(C) Distribution is made as permitted under the terms of 22
the first-trust instrument and the second -trust instrument for the benefit of 23
the beneficiary. 24
(e) If an authorized fiduciary has limited distributive discretion 25
over part but not all of the principal of a first trust, the fiduciary may 26
exercise the decanting power under this section over that part of the 27
principal over which the authorized fiduciary has limited distributive 28
discretion. 29
30
28-78-113. Trust for beneficiary with disability. 31
(a) In this section: 32
(1) “Beneficiary with a disability” means a beneficiary of a 33
first trust who the special -needs fiduciary believes may qualify for 34
governmental benefits based on disability, whether or not the beneficiary 35
currently receives those benefits or is an individual who has been 36 HB1749
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adjudicated incompetent; 1
(2) “Governmental benefits” means financial aid or services from 2
a state, federal, or other public agency; 3
(3) “Special-needs fiduciary” means, with respect to a trust 4
that has a beneficiary with a disability: 5
(A) A trustee or other fiduciary, other than a settlor, 6
that has discretion to distribute part or all of the principal of a first 7
trust to one or more current beneficiaries; 8
(B) If no trustee or fiduciary has discretion under 9
subdivision (a)(3)(A) of this section, a trustee or other fiduciary, other 10
than a settlor, that has discretion to distribute part or all of the income 11
of the first trust to one or more current beneficiaries; or 12
(C) If no trustee or fiduciary has discretion under 13
subdivisions (a)(3)(A) and (B) of this section, a trustee or other fiduciary, 14
other than a settlor, that is required to distribute part or all of the 15
income or principal of the first trust to one or more current beneficiaries; 16
and 17
(4) “Special-needs trust” means a trust the trustee believes 18
would not be considered a resource for purposes of determining whether a 19
beneficiary with a disability is eligible for governmental benefits. 20
(b) A special-needs fiduciary may exercise the decanting power under § 21
28-78-111 over the principal of a first trust as if the fiduciary had 22
authority to distribute principal to a beneficiary with a disability subject 23
to expanded distributive discretion if: 24
(1) A second trust is a special -needs trust that benefits the 25
beneficiary with a disability; and 26
(2) The special-needs fiduciary determines that exercise of the 27
decanting power will further the purposes of the first trust. 28
(c) In an exercise of the decanting power under this section, the 29
following rules apply: 30
(1) Notwithstanding § 28 -78-111(c)(2), the interest in the 31
second trust of a beneficiary with a disability may: 32
(A) Be a pooled trust as defined by Medicaid law for the 33
benefit of the beneficiary with a disability under 42 U.S.C. Section 34
1396p(d)(4)(C), as it existed on January 1, 2025; or 35
(B) Contain payback provisions complying with 36 HB1749
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reimbursement requirements of Medicaid law under 42 U.S.C. Section 1
1396p(d)(4)(A), as it existed on January 1, 2025; 2
(2) Section 28-78-111(c)(3) does not apply to the interests of 3
the beneficiary with a disability; and 4
(3) Except as affected by any change to the interests of the 5
beneficiary with a disability, the second trust, or if there are two or more 6
second trusts, the second trusts in the aggregate, shall grant each other 7
beneficiary of the first trust beneficial interests in the second trusts 8
which are substantially similar to the beneficiary’s beneficial interests in 9
the first trust. 10
11
28-78-114. Protection of charitable interest. 12
(a) In this section: 13
(1) “Determinable charitable interest” means a charitable 14
interest that is a right to a mandatory distribution currently, periodically, 15
on the occurrence of a specified event, or after the passage of a specified 16
time and which is unconditional or will be held solely for charitable 17
purposes. 18
(2) “Unconditional” means not subject to the occurrence of a 19
specified event that is not certain to occur, other than a requirement in a 20
trust instrument that a charitable organization be in existence or qualify 21
under a particular provision of the United States Internal Revenue Code of 22
1986, as amended, on the date of the distribution, if the charitable 23
organization meets the requirement on the date of determination. 24
(b) If a first trust contains a determinable charitable interest, the 25
Attorney General has the rights of a qualified beneficiary and may represent 26
and bind the charitable interest. 27
(c) If a first trust contains a charitable interest, the second trust 28
or trusts shall not: 29
(1) Diminish the charitable interest; 30
(2) Diminish the interest of an identified charitable 31
organization that holds the charitable interest; 32
(3) Alter any charitable purpose stated in the first -trust 33
instrument; or 34
(4) Alter any condition or restriction related to the charitable 35
interest. 36 HB1749
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(d) If there are two (2) or more second trusts, the second trusts 1
shall be treated as one trust for purposes of determining whether the 2
exercise of the decanting power diminishes the charitable interest or 3
diminishes the interest of an identified charitable organization for purposes 4
of subsection (c) of this section. 5
(e) If a first trust contains a determinable charitable interest, the 6
second trust or trusts that include a charitable interest pursuant to 7
subsection (c) of this section shall be administered under the law of this 8
state unless the: 9
(1) Attorney General, after receiving notice under § 28 -78-107, 10
fails to object in a signed record delivered to the authorized fiduciary 11
within the notice period; 12
(2) Attorney General consents in a signed record to the second 13
trust or trusts being administered under the law of another jurisdiction; or 14
(3) Court approves the exercise of the decanting power. 15
(f) This chapter does not limit the powers and duties of the Attorney 16
General under law of this state other than this chapter. 17
18
27-78-115. Trust limitation on decanting. 19
(a) An authorized fiduciary shall not exercise the decanting power to 20
the extent the first -trust instrument expressly prohibits exercise of: 21
(1) The decanting power; or 22
(2) A power granted by state law to the fiduciary to distribute 23
part or all of the principal of the trust to another trust or to modify the 24
trust. 25
(b) Exercise of the decanting power is subject to any restriction in 26
the first-trust instrument that expressly applies to exercise of: 27
(1) The decanting power; or 28
(2) A power granted by state law to a fiduciary to distribute 29
part or all of the principal of the trust to another trust or to modify the 30
trust. 31
(c) A general prohibition of the amendment or revocation of a first 32
trust, a spendthrift clause, or a clause restraining the voluntary or 33
involuntary transfer of a beneficiary’s interest does not preclude exercise 34
of the decanting power. 35
(d) Subject to subsections (a) and (b) of this section, an authorized 36 HB1749
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fiduciary may exercise the decanting power under this chapter even if the 1
first-trust instrument permits the authorized fiduciary or another person to 2
modify the first-trust instrument or to distribute part or all of the 3
principal of the first trust to another trust. 4
(e) If a first-trust instrument contains an express prohibition 5
described in subsection (a) of this section or an express restriction 6
described in subsection (b) of this section, the provision shall be included 7
in the second-trust instrument. 8
9
28-78-116. Change in compensation. 10
(a) If a first-trust instrument specifies an authorized fiduciary’s 11
compensation, the fiduciary shall not exercise the decanting power to 12
increase the fiduciary’s compensation above the specified compensation 13
unless: 14
(1) All qualified beneficiaries of the second trust consent to 15
the increase in a signed record; or 16
(2) The increase is approved by the court. 17
(b) If a first-trust instrument does not specify an authorized 18
fiduciary’s compensation, the fiduciary shall not exercise the decanting 19
power to increase the fiduciary’s compensation above the compensation 20
permitted by § 28-73-708 unless: 21
(1) All qualified beneficiaries of the second trust consent to 22
the increase in a signed record; or 23
(2) The increase is approved by the court. 24
(c) A change in an authorized fiduciary’s compensation which is 25
incidental to other changes made by the exercise of the decanting power is 26
not an increase in the fiduciary’s compensation for purposes of subsections 27
(a) and (b) of this section. 28
29
28-78-117. Relief from liability and indemnification. 30
(a) Except as otherwise provided in this section, a second -trust 31
instrument shall not relieve an authorized fiduciary from liability for 32
breach of trust to a greater extent than the first -trust instrument. 33
(b) A second-trust instrument may provide for indemnification of an 34
authorized fiduciary of the first trust or another person acting in a 35
fiduciary capacity under the first trust for any liability or claim that 36 HB1749
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would have been payable from the first trust if the decanting power had not 1
been exercised. 2
(c) A second-trust instrument shall not reduce fiduciary liability in 3
the aggregate. 4
(d) Subject to subsection (c) of this section, a second-trust 5
instrument may divide and reallocate fiduciary powers among fiduciaries, 6
including one or more trustees, distribution advisors, investment advisors, 7
trust protectors, or other persons, and relieve a fiduciary from liability 8
for an act or failure to act of another fiduciary as permitted by law of this 9
state other than this chapter. 10
11
28-78-118. Removal or replacement of authorized fiduciary. 12
An authorized fiduciary shall not exercise the decanting power to 13
modify a provision in a first -trust instrument granting another person power 14
to remove or replace the fiduciary unless the: 15
(1) Person holding the power consents to the modification in a 16
signed record and the modification applies only to the person; 17
(2) Person holding the power and the qualified beneficiaries of 18
the second trust consent to the modification in a signed record and the 19
modification grants a substantially similar power to another person; or 20
(3) Court approves the modification and the modification grants 21
a substantially similar power to another person. 22
23
28-78-119. Tax-related limitations. 24
(a) In this section: 25
(1) “Grantor trust” means a trust as to which a settlor of a 26
first trust is considered the owner under 26 U.S.C. Sections 671 through 677, 27
as it existed on January 1, 2025, or 26 U.S.C. Section 679, as it existed on 28
January 1, 2025; 29
(2) “Internal Revenue Code” means the United States Internal 30
Revenue Code of 1986, as it existed on January 1, 2025; 31
(3) “Nongrantor trust” means a trust that is not a grantor 32
trust; and 33
(4) “Qualified benefits property” means property subject to the 34
minimum distribution requirements of 26 U.S.C. Section 401(a)(9), as it 35
existed on January 1, 2025, and any applicable regulations, or to any similar 36 HB1749
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requirements that refer to 26 U.S.C. Section 401(a)(9) or the regulations. 1
(b) An exercise of the decanting power is subject to the following 2
limitations: 3
(1) If a first trust contains property that qualified, or would 4
have qualified but for provisions of this chapter other than this section, 5
for a marital deduction for purposes of the gift or estate tax under the 6
Internal Revenue Code or a state gift, estate, or inheritance tax, the 7
second-trust instrument shall not include or omit any term that, if included 8
in or omitted from the trust instrument for the trust to which the property 9
was transferred, would have prevented the transfer from qualifying for the 10
deduction, or would have reduced the amount of the deduction, under the same 11
provisions of the Internal Revenue Code or state law under which the transfer 12
qualified; 13
(2) If the first trust contains property that qualified, or 14
would have qualified but for provisions of this chapter other than this 15
section, for a charitable deduction for purposes of the income, gift, or 16
estate tax under the Internal Revenue Code or a state income, gift, estate, 17
or inheritance tax, the second -trust instrument shall not include or omit any 18
term that, if included in or omitted from the trust instrument for the trust 19
to which the property was transferred, would have prevented the transfer from 20
qualifying for the deduction, or would have reduced the amount of the 21
deduction, under the same provisions of the Internal Revenue Code or state 22
law under which the transfer qualified; 23
(3)(A) If the first trust contains property that qualified, or 24
would have qualified but for provisions of this chapter other than this 25
section, for the exclusion from the gift tax described in 26 U.S.C. Section 26
2503(b), as it existed on January 1, 20205, the second -trust instrument shall 27
not include or omit a term that, if included in or omitted from the trust 28
instrument for the trust to which the property was transferred, would have 29
prevented the transfer from qualifying under 26 U.S.C. Section 2503(b), as 30
amended. 31
(B) If the first trust contains property that qualified, 32
or would have qualified but for provisions of this chapter other than this 33
section, for the exclusion from the gift tax described in 26 U.S.C. Section 34
2503(b), as it existed on January 1, 2025, by application of 26 U.S.C. 35
Section 2503(c),as it existed on January 1, 2025, the second -trust instrument 36 HB1749
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shall not include or omit a term that, if included or omitted from the trust 1
instrument for the trust to which the property was transferred, would have 2
prevented the transfer from qualifying under 26 U.S.C. Section 2503(c), as it 3
existed on January 1, 2025; 4
(4)(A) If the property of the first trust includes shares of 5
stock in an S corporation, as defined in 26 U.S.C. Section 1361, as it 6
existed on January 1, 2025, and the first trust is, or but for provisions of 7
this chapter other than this section would be, a permitted shareholder under 8
any provision of 26 U.S.C. Section 1361, as it existed on January 1, 2025, an 9
authorized fiduciary may exercise the power with respect to part or all of 10
the S-corporation stock only if any second trust receiving the stock is a 11
permitted shareholder under 26 U.S.C. Section 1361(c)(2), as it existed on 12
January 1, 2025. 13
(B) If the property of the first trust includes shares of 14
stock in an S corporation and the first trust is, or but for provisions of 15
this chapter other than this section would be, a qualified subchapter -S trust 16
within the meaning of 26 U.S.C. Section 1361(d), as it existed on January 1, 17
2025, the second-trust instrument shall not include or omit a term that 18
prevents the second trust from qualifying as a qualified subchapter -S trust; 19
(5) If the first trust contains property that qualified, or would 20
have qualified but for provisions of this chapter other than this section, 21
for a zero inclusion ratio for purposes of the generation -skipping transfer 22
tax under 26 U.S.C. Section 2642(c), as it existed on January 1, 2025, the 23
second-trust instrument shall not include or omit a term that, if included in 24
or omitted from the first -trust instrument, would have prevented the transfer 25
to the first trust from qualifying for a zero inclusion ratio under 26 U.S.C. 26
Section 2642(c), as it existed on January 1, 2025; 27
(6)(A) If the first trust is directly or indirectly the 28
beneficiary of qualified benefits property, the second -trust instrument shall 29
not include or omit any term that, if included in or omitted from the first -30
trust instrument, would have increased the minimum distributions required 31
with respect to the qualified benefits property under 26 U.S.C. Section 32
401(a)(9), as it existed on January 1, 2025, and any applicable regulations, 33
or any similar requirements that refer to 26 U.S.C. Section 401(a)(9), as it 34
existed on January 1, 2025, or the regulations. 35
(B) If an attempted exercise of the decanting power 36 HB1749
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violates the preceding sentence, the trustee is deemed to have held the 1
qualified benefits property and any reinvested distributions of the property 2
as a separate share from the date of the exercise of the power and § 23 -78-3
122 applies to the separate share; 4
(7) If the first trust qualifies as a grantor trust because of 5
the application of 26 U.S.C. Section 672(f)(2)(A), as it existed on January 6
1, 2025, the second trust shall not include or omit a term that, if included 7
in or omitted from the first -trust instrument, would have prevented the first 8
trust from qualifying under 26 U.S.C. Section 672(f)(2)(A), as it existed on 9
January 1, 2025; 10
(8)(A) In subdivision(b)(8) of this section, “tax benefit” means 11
a federal or state tax deduction, exemption, exclusion, or other benefit not 12
otherwise listed in this section, except for a benefit arising from being a 13
grantor trust. 14
(B) Subject to subdivision (b)(9) of this section, a 15
second-trust instrument shall not include or omit a term that, if included in 16
or omitted from the first -trust instrument, would have prevented 17
qualification for a tax benefit if the: 18
(i) First-trust instrument expressly indicates an 19
intent to qualify for the benefit or the first-trust instrument clearly is 20
designed to enable the first trust to qualify for the benefit; and 21
(ii) Transfer of property held by the first trust or 22
the first trust qualified, or but for provisions of this other than this 23
chapter, would have qualified for the tax benefit; 24
(9) Subject to subdivision (b)(4) of this section except as 25
otherwise provided in: 26
(A) Subdivision (b)(7) of this section, the second trust 27
may be a nongrantor trust, even if the first trust is a grantor trust; and 28
(B) Subdivision (b)(10) of this section, the second trust 29
may be a grantor trust, even if the first trust is a nongrantor trust; and 30
(10) An authorized fiduciary shall not exercise the decanting 31
power if a settlor objects in a signed record delivered to the fiduciary 32
within the notice period and the first trust: 33
(A) And a second trust are both grantor trusts, in whole 34
or in part, the first trust grants the settlor or another person the power to 35
cause the first trust to cease to be a grantor trust, and the second trust 36 HB1749
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does not grant an equivalent power to the settlor or other person; or 1
(B) Is a nongrantor trust and a second trust is a grantor 2
trust, in whole or in part, with respect to the settlor, unless the: 3
(i) Settlor has the power at all times to cause the 4
second trust to cease to be a grantor trust; or 5
(ii) First-trust instrument contains a provision 6
granting the settlor or another person a power that would cause the first 7
trust to cease to be a grantor trust and the second -trust instrument contains 8
the same provision. 9
10
28-78-120. Duration of second trust. 11
(a) Subject to subsection (b) of this section, a second trust may have 12
a duration that is the same as or different from the duration of the first 13
trust. 14
(b) To the extent that property of a second trust is attributable to 15
property of the first trust, the property of the second trust is subject to 16
any rules governing maximum perpetuity, accumulation, or suspension of the 17
power of alienation which apply to property of the first trust. 18
19
28-78-121. Need to distribute not required. 20
An authorized fiduciary may exercise the decanting power whether or not 21
under the first trust’s discretionary distribution standard the fiduciary 22
would have made or could have been compelled to make a discretionary 23
distribution of principal at the time of the exercise. 24
25
28-78-122. Saving provision. 26
(a) If exercise of the decanting power would be effective under this 27
chapter except that the second -trust instrument in part does not comply with 28
this chapter, the exercise of the power is effective and the following rules 29
apply with respect to the principal of the second trust attributable to the 30
exercise of the power: 31
(1) A provision in the second -trust instrument which is not 32
permitted under this chapter is void to the extent necessary to comply with 33
this chapter; and 34
(2) A provision required by this chapter to be in the second -35
trust instrument which is not contained in the instrument is deemed to be 36 HB1749
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included in the instrument to the extent necessary to comply with this 1
chapter. 2
(b) If a trustee or other fiduciary of a second trust determines that 3
subsection (a) of this section applies to a prior exercise of the decanting 4
power, the fiduciary shall take corrective action consistent with the 5
fiduciary’s duties. 6
7
28-78-123. Trust for care of animal. 8
(a) In this section: 9
(1) “Animal trust” means a trust or an interest in a trust 10
created to provide for the care of one or more animals; and 11
(2) “Protector” means a person appointed in an animal trust to 12
enforce the trust on behalf of the animal or, if no such person is appointed 13
in the trust, a person appointed by the court for that purpose. 14
(b) The decanting power may be exercised over an animal trust that has 15
a protector to the extent the trust could be decanted under this chapter if 16
each animal that benefits from the trust were an individual, if the protector 17
consents in a signed record to the exercise of the power. 18
(c) A protector for an animal has the rights under this chapter of a 19
qualified beneficiary. 20
(d) Notwithstanding any other provision of this chapter, if a first 21
trust is an animal trust, in an exercise of the decanting power, the second 22
trust shall provide that trust property may be applied only to its intended 23
purpose for the period the first trust benefitted the animal. 24
25
28-78-124. Terms of second trust. 26
A reference in the Arkansas Trust Code, § 28 -73-101 et seq., to a trust 27
instrument or terms of the trust includes a second -trust instrument and the 28
terms of the second trust. 29
30
28-78-125. Settlor. 31
(a) For purposes of law of this state other than this chapter and 32
subject to subsection (b) of this section, a settlor of a first trust is 33
deemed to be the settlor of the second trust with respect to the portion of 34
the principal of the first trust subject to the exercise of the decanting 35
power. 36 HB1749
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(b) In determining settlor intent with respect to a second trust, the 1
intent of a settlor of the first trust, a settlor of the second trust, and 2
the authorized fiduciary may be considered. 3
4
28-78-126. Later-discovered property. 5
(a) Except as otherwise provided in subsection (c) of this section, if 6
exercise of the decanting power was intended to distribute all the principal 7
of the first trust to one or more second trusts, later -discovered property 8
belonging to the first trust and property paid to or acquired by the first 9
trust after the exercise of the power is part of the trust estate of the 10
second trust or trusts. 11
(b) Except as otherwise provided in subsection (c) of this section, if 12
exercise of the decanting power was intended to distribute less than all the 13
principal of the first trust to one or more second trusts, later -discovered 14
property belonging to the first trust or property paid to or acquired by the 15
first trust after exercise of the power remains part of the trust estate of 16
the first trust. 17
(c) An authorized fiduciary may provide in an exercise of the 18
decanting power or by the terms of a second trust for disposition of later -19
discovered property belonging to the first trust or property paid to or 20
acquired by the first trust after exercise of the power. 21
22
28-78-127. Obligations. 23
A debt, liability, or other obligation enforceable against property of 24
a first trust is enforceable to the same extent against the property when 25
held by the second trust after exercise of the decanting power. 26
27
28-78-128. Uniformity of application and construction. 28
In applying and construing this uniform act, consideration shall be 29
given to the need to promote uniformity of the law with respect to its 30
subject matter among states that enact it. 31
32
28-78-129. Relation to Electronic Signatures in Global and National 33
Commerce Act. 34
This chapter modifies, limits, or supersedes the Electronic Signatures 35
in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., but does 36 HB1749
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not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C. Section 1
7001(c), or authorize electronic delivery of any of the notices described in 2
Section 103(b) of that act, 15 U.S.C. Section 7003(b). 3
4
28-78-130. Severability. 5
If any provision of this chapter or its application to any person or 6
circumstance is held invalid, the invalidity does not affect other provisions 7
or applications of this chapter which can be given effect without the invalid 8
provision or application, and to this end the provisions of this chapter are 9
severable. 10
11
28-78-131. [Reserved.] 12
13
28-78-132. Effective date. 14
This chapter takes effect on and after January 1, 2026. 15
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