ENGROSSED ORIGINAL
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A BILL
25-224
IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
_________________________
To amend Title 19 of the District of Columbia Official Code 19 to enact the Uniform Trust
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Decanting Code to provide clear rules pursuant to which a trustee, acting in accordance 2
with fiduciary duties, may modify the terms of a trust to address unanticipated changes in 3
beneficiary circumstances and other changes to effectuate the settlor’s general intent, to 4
provide appropriate limits on a trustee’s ability to decant, to protect beneficiaries by 5
requiring notice and providing that their interests may not be reduced, to protect 6
charitable interests by providing that they may not be reduced and requiring notice of a 7
protect decanting to the Attorney General, to protect trustees from liability from a 8
previous trustee’s decanting, and for other purposes. 9
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BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this 11
act may be cited as the “Uniform Trust Decanting Amendment Act of 2024.” 12
Sec. 2. Title 19 of the District of Columbia Official Code is amended as follows: 13
(a) The table of contents is amended by adding at the end the phrase: “19. Uniform Trust 14
Decanting Code . . . 19-1901”. 15
(b) A new chapter 19 is added to read as follows: 16
“CHAPTER 19. 17
“UNIFORM TRUST DECANTING ACT 18
“Section 19
Ҥ 19-1901. Short title. 20
Ҥ 19-1902. Definitions. 21 ENGROSSED ORIGINAL
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Ҥ 19- 1903. Scope. 22
Ҥ 19- 1904. Fiduciary duty. 23
Ҥ 19- 1905. Application; governing law. 24
Ҥ 19- 1906. Reasonable reliance. 25
Ҥ 19- 1907. Notice; exercise of decanting power. 26
Ҥ 19- 1908. Representation. 27
Ҥ 19- 1909. Court involvement. 28
Ҥ 19- 1910. Formalities. 29
Ҥ 19- 1911. Decanting power under expanded distributive discretion. 30
Ҥ 19- 1912. Decanting power under limited distributive discretion. 31
Ҥ 19- 1913. Trust for beneficiary with disability. 32
Ҥ 19- 1914. Protection of charitable interest. 33
Ҥ 19- 1915. Trust limitation on decanting. 34
Ҥ 19- 1916. Change in compensation. 35
Ҥ 19- 1917. Relief from liability and indemnification. 36
Ҥ 19- 1918. Removal or replacement of authorized fiduciary. 37
Ҥ 19- 1919. Tax-related limitations. 38
Ҥ 19- 1920. Duration of second trust. 39
Ҥ 19- 1921. Need to distribute not required. 40
Ҥ 19- 1922. Saving provision. 41 ENGROSSED ORIGINAL
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Ҥ 19- 1923. Trust for care of animal. 42
Ҥ 19- 1924. Terms of second trust. 43
Ҥ 19- 1925. Settlor. 44
Ҥ 19- 1926. Later-discovered property. 45
Ҥ 19- 1927. Obligations. 46
Ҥ 19- 1928. Uniformity of application and construction. 47
Ҥ 19- 1929. Relation to Electronic Signatures in Global and National Commerce Act. 48
Ҥ 19- 1901. Short title. 49
“This chapter may be cited as the “Uniform Trust Decanting Code”. 50
Ҥ 19- 1902. Definitions. 51
“(a) For the purposes of this chapter, the term: 52
“(1) “Appointive property” means the property or property interest subject to a 53
power of appointment. 54
“(2) “Ascertainable standard” means a standard relating to an individual’s health, 55
education, support, or maintenance within the meaning of 26 U.S.C. § 2041(b)(1)(A) or 26 56
U.S.C. § 2514(c)(1) and any applicable regulations. 57
“(3) “Attorney General” means the Attorney General for the District of Columbia. 58
“(4) “Authorized fiduciary” means: 59 ENGROSSED ORIGINAL
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“(A) A trustee or other fiduciary, other than a settlor, that has discretion to 60
distribute or direct a trustee to distribute part or all of the principal of the first trust to one or 61
more current beneficiaries; 62
“(B) A special fiduciary appointed under § 19- 1909; or 63
“(C) A special-needs fiduciary under § 19- 1913. 64
“(5) “Beneficiary” means a person that: 65
“(A) Has a present or future, vested or contingent, beneficial interest in a 66
trust; 67
“(B) Holds a power of appointment over trust property; or 68
“(C) Is an identified charitable organization that will or may receive 69
distributions under the terms of the trust. 70
“(6) “Charitable interest” means an interest in a trust which: 71
“(A) Is held by an identified charitable organization and makes the 72
organization a qualified beneficiary; 73
“(B) Benefits only charitable organizations and, if the interest were held 74
by an identified charitable organization, would make the organization a qualified beneficiary; or 75
“(C) Is held solely for charitable purposes and, if the interest were held by 76
an identified charitable organization, would make the organization a qualified beneficiary. 77
“(7) “Charitable organization” means: 78 ENGROSSED ORIGINAL
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“(A) A person, other than an individual, organized and operated 79
exclusively for charitable purposes; or 80
“(B) A government or governmental subdivision, agency, or 81
instrumentality, to the extent it holds funds exclusively for a charitable purpose. 82
“(8) “Charitable purpose” means the relief of poverty, the advancement of 83
education or religion, the promotion of health, a municipal or other governmental purpose, or 84
another purpose the achievement of which is beneficial to the community. 85
“(9) “Court” means the Superior Court of the District of Columbia. 86
“(10) “Current beneficiary” means a beneficiary that on the date the beneficiary’s 87
qualification is determined is a distributee or permissible distributee of trust income or principal. 88
The term includes the holder of a presently exercisable general power of appointment but does 89
not include a person that is a beneficiary only because the person holds any other power of 90
appointment. 91
“(11) “Decanting power” means the power of an authorized fiduciary under this 92
chapter to distribute property of a first trust to one or more second trusts or to modify the terms 93
of the first trust. 94
“(12) “District” means the District of Columbia. 95
“(13) “Expanded distributive discretion” means a discretionary power of 96
distribution that is not limited to an ascertainable standard or a reasonably definite standard. 97 ENGROSSED ORIGINAL
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“(14) “First trust” means a trust over which an authorized fiduciary may exercise 98
the decanting power. 99
“(15) “First-trust instrument” means the trust instrument for a first trust. 100
“(16) “General power of appointment” means a power of appointment exercisable 101
in favor of a powerholder, the powerholder’s estate, a creditor of the powerholder, or a creditor 102
of the powerholder’s estate. 103
“(17) “Jurisdiction”, with respect to a geographic area, includes a state or country. 104
“(18) “Person” means an individual, estate, business or nonprofit entity, public 105
corporation, government or governmental subdivision, agency, or instrumentality, or other legal 106
entity. 107
“(19) “Power of appointment” means a power that enables a powerholder acting 108
in a nonfiduciary capacity to designate a recipient of an ownership interest in or another power of 109
appointment over the appointive property. The term “power of appointment” does not include a 110
power of attorney. 111
“(20) “Powerholder” means a person in which a donor creates a power of 112
appointment. 113
“(21)(A) “Presently exercisable power of appointment” means a power of 114
appointment exercisable by the powerholder at the relevant time. 115 ENGROSSED ORIGINAL
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“(B) The term “presently exercisable power of appointment” includes a 116
power of appointment exercisable only after the occurrence of a specified event, the satisfaction 117
of an ascertainable standard, or the passage of a specified time only after: 118
“(i) The occurrence of the specified event; 119
“(ii) The satisfaction of the ascertainable standard; or 120
“(iii) The passage of the specified time. 121
“(C) The term “presently exercisable power of appointment” does not 122
include a power exercisable only at the powerholder’s death. 123
“(22) “Qualified beneficiary” means a beneficiary that on the date the 124
beneficiary’s qualification is determined: 125
“(A) Is a distributee or permissible distributee of trust income or principal; 126
“(B) Would be a distributee or permissible distributee of trust income or 127
principal if the interests of the distributees described in subparagraph (A) of this paragraph 128
terminated on that date without causing the trust to terminate; or 129
“(C) Would be a distributee or permissible distributee of trust income or 130
principal if the trust terminated on that date. 131
“(23) “Reasonably definite standard” means a clearly measurable standard under 132
which a holder of a power of distribution is legally accountable within the meaning of 26 U.S.C. 133
§ 674(b)(5)(A) and any applicable regulations. 134 ENGROSSED ORIGINAL
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“(24) “Record” means information that is inscribed on a tangible medium or that 135
is stored in an electronic or other medium and is retrievable in perceivable form. 136
“(25) “Second trust” means: 137
“(A) A first trust after modification under this chapter; or 138
“(B) A trust to which a distribution of property from a first trust is or may 139
be made under this chapter. 140
“(26) “Second- trust instrument” means the trust instrument for a second trust. 141
“(27) “Settlor”, except as otherwise provided in § 19- 1925, means a person, 142
including a testator, that creates or contributes property to a trust. If more than one person creates 143
or contributes property to a trust, each person is a settlor of the portion of the trust property 144
attributable to the person’s contribution except to the extent another person has power to revoke 145
or withdraw that portion. 146
“(28) “Sign” means, with present intent to authenticate or adopt a record: 147
“(A) To execute or adopt a tangible symbol; or 148
“(B) To attach to or logically associate with the record an electronic 149
symbol, sound, or process. 150
“(29) “State” means a state of the United States, the District, Puerto Rico, the 151
United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of 152
the United States. 153
“(30) “Terms of a trust” means: 154 ENGROSSED ORIGINAL
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“(A) Except as otherwise provided in subparagraph (B) of this paragraph, 155
the manifestation of the settlor’s intent regarding a trust’s provisions as: 156
“(i) Expressed in the trust instrument; or 157
“(ii) Established by other evidence that would be admissible in a 158
judicial proceeding; or 159
“(B) The trust’s provisions as established, determined, or amended by: 160
“(i) A trustee or trust director in accordance with applicable law; 161
“(ii) Court order; or 162
“(iii) A nonjudicial settlement agreement under § 19-1301.11. 163
“(31) “Trust instrument” means a record executed by the settlor to create a trust or 164
by any person to create a second trust which contains some or all of the terms of the trust, 165
including any amendments. 166
Ҥ 19- 1903. Scope. 167
“(a) Except as otherwise provided in subsections (b) and (c) of this section, this chapter 168
applies to an express trust that is irrevocable or revocable by the settlor only with the consent of 169
the trustee or a person holding an adverse interest. 170
“(b) This chapter does not apply to a trust held solely for charitable purposes. 171
“(c) Subject to § 19- 1915, a trust instrument may restrict or prohibit exercise of the 172
decanting power. 173 ENGROSSED ORIGINAL
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“(d) This chapter does not limit the power of a trustee, powerholder, or other person to 174
distribute or appoint property in further trust or to modify a trust under the trust instrument, law 175
of the District other than this chapter, common law, a court order, or a nonjudicial settlement 176
agreement. 177
“(e) This chapter does not affect the ability of a settlor to provide in a trust instrument for 178
the distribution of the trust property or appointment in further trust of the trust property or for 179
modification of the trust instrument. 180
Ҥ 19- 1904. Fiduciary duty. 181
“(a) In exercising the decanting power, an authorized fiduciary shall act in accordance 182
with its fiduciary duties, including the duty to act in accordance with the purposes of the first 183
trust. 184
“(b) This chapter does not create or imply a duty to exercise the decanting power or to 185
inform beneficiaries about the applicability of this chapter. 186
“(c) Except as otherwise provided in a first-trust instrument, for the purposes of this 187
chapter and §§ 19- 1308.01 and 19- 1308.02(a), the terms of the first trust are deemed to include 188
the decanting power. 189
Ҥ 19- 1905. Application; governing law. 190
“This chapter applies to a trust created before, on, or after the effective date of this 191
chapter, which: 192 ENGROSSED ORIGINAL
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“(1) Has its principal place of administration in the District, including a trust 193
whose principal place of administration has been changed to the District; or 194
“(2) Provides by its trust instrument that it is governed by the law of the District 195
or is governed by the law of the District for the purpose of: 196
“(A) Administration, including administration of a trust whose governing 197
law for purposes of administration has been changed to the law of the District; 198
“(B) Construction of terms of the trust; or 199
“(C) Determining the meaning or effect of terms of the trust. 200
Ҥ 19- 1906. Reasonable reliance. 201
“A trustee or other person that reasonably relies on the validity of a distribution of part or 202
all of the property of a trust to another trust, or a modification of a trust, under this chapter, law 203
of the District other than this chapter, or the law of another jurisdiction is not liable to any person 204
for any action or failure to act as a result of the reliance. 205
Ҥ 19- 1907. Notice; exercise of decanting power. 206
“(a) For the purposes of this section, a notice period begins on the day notice is given 207
under subsection (c) of this section and ends 59 days after the day notice is given. 208
“(b) Except as otherwise provided in this chapter, an authorized fiduciary may exercise 209
the decanting power without the consent of any person and without court approval. 210 ENGROSSED ORIGINAL
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“(c) Except as otherwise provided in subsection (f) of this section, an authorized fiduciary 211
shall give notice in a record of the intended exercise of the decanting power not later than 60 212
days before the exercise to: 213
“(1) Each settlor of the first trust, if living or then in existence; 214
“(2) Each qualified beneficiary of the first trust; 215
“(3) Each holder of a presently exercisable power of appointment over any part or 216
all of the first trust; 217
“(4) Each person that currently has the right to remove or replace the authorized 218
fiduciary; 219
“(5) Each other fiduciary of the first trust; 220
“(6) Each fiduciary of the second trust; and 221
“(7) The Attorney General, if § 19- 1914(b) applies. 222
“(d) An authorized fiduciary is not required to give notice under subsection (c) of this 223
section to a qualified beneficiary who is a minor and has no representative or to a person that is 224
not known to the fiduciary or is known to the fiduciary but cannot be located by the fiduciary 225
after reasonable diligence. 226
“(e) A notice under subsection (c) of this section must: 227
“(1) Specify the manner in which the authorized fiduciary intends to exercise the 228
decanting power; 229
“(2) Specify the proposed effective date for exercise of the power; 230 ENGROSSED ORIGINAL
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“(3) Include a copy of the first-trust instrument; and 231
“(4) Include a copy of all second- trust instruments. 232
“(f) The decanting power may be exercised before expiration of the notice period under 233
subsection (a) of this section if all persons entitled to receive notice waive the period in a signed 234
record. 235
“(g) The receipt of notice, waiver of the notice period, or expiration of the notice period 236
does not affect the right of a person to file an application under § 19- 1909 asserting that: 237
“(1) An attempted exercise of the decanting power is ineffective because it did not 238
comply with this chapter or was an abuse of discretion or breach of fiduciary duty; or 239
“(2) § 19- 1922 applies to the exercise of the decanting power. 240
“(h) An exercise of the decanting power is not ineffective because of the failure to give 241
notice to one or more persons under subsection (c) of this section if the authorized fiduciary 242
acted with reasonable care to comply with subsection (c) of this section. 243
Ҥ 19- 1908. Representation. 244
“(a) Notice to a person with authority to represent and bind another person under a first-245
trust instrument or Chapter 13 has the same effect as notice given directly to the person 246
represented. 247
“(b) Consent of or waiver by a person with authority to represent and bind another person 248
under a first-trust instrument or Chapter 13 is binding on the person represented unless the 249 ENGROSSED ORIGINAL
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person represented objects to the representation before the consent or waiver otherwise would 250
become effective. 251
“(c) A person with authority to represent and bind another person under a first-trust 252
instrument or Chapter 13 may file an application under § 19- 1909 on behalf of the person 253
represented. 254
“(d) A settlor may not represent or bind a beneficiary under this chapter. 255
Ҥ 19- 1909. Court involvement. 256
“(a) On application of an authorized fiduciary a person entitled to notice under § 19-257
1907(c), a beneficiary, or with respect to a charitable interest the Attorney General or other 258
person that has standing to enforce the charitable interest, the court may: 259
“(1) Provide instructions to the authorized fiduciary regarding whether a proposed 260
exercise of the decanting power is permitted under this chapter and consistent with the fiduciary 261
duties of the authorized fiduciary; 262
“(2) Appoint a special fiduciary and authorize the special fiduciary to determine 263
whether the decanting power should be exercised under this chapter and to exercise the decanting 264
power; 265
“(3) Approve an exercise of the decanting power; 266
“(4) Determine that a proposed or attempted exercise of the decanting power is 267
ineffective because: 268 ENGROSSED ORIGINAL
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“(A) After applying § 19- 1922, the proposed or attempted exercise does 269
not or did not comply with this chapter; or 270
“(B) The proposed or attempted exercise would be or was an abuse of the 271
fiduciary’s discretion or a breach of fiduciary duty; 272
“(5) Determine the extent to which § 19- 1922 applies to a prior exercise of the 273
decanting power; 274
“(6) Provide instructions to the trustee regarding the application of § 19- 1922 to a 275
prior exercise of the decanting power; or 276
“(7) Order other relief to carry out the purposes of this chapter. 277
“(b) On application of an authorized fiduciary, the court may approve: 278
“(1) An increase in the fiduciary’s compensation under § 19- 1916; or 279
“(2) A modification under § 19- 1918 of a provision granting a person the right to 280
remove or replace the fiduciary. 281
Ҥ 19- 1910. Formalities. 282
“An exercise of the decanting power must be made in a record signed by an authorized 283
fiduciary. The signed record must, directly or by reference to the notice required by § 19- 1907, 284
identify the first trust and the second trust or trusts and state the property of the first trust being 285
distributed to each second trust and the property, if any, that remains in the first trust. 286
Ҥ 19- 1911. Decanting power under expanded distributive discretion. 287
“(a) For the purposes of this section, the term: 288 ENGROSSED ORIGINAL
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“(1) “Noncontingent right” means a right that is not subject to the exercise of 289
discretion or the occurrence of a specified event that is not certain to occur. The term 290
“noncontingent right” does not include a right held by a beneficiary if any person has discretion 291
to distribute property subject to the right to any person other than the beneficiary or the 292
beneficiary’s estate. 293
“(2) “Presumptive remainder beneficiary” means a qualified beneficiary other 294
than a current beneficiary. 295
“(3) “Successor beneficiary” means a beneficiary that is not a qualified 296
beneficiary on the date the beneficiary’s qualification is determined. The term “successor 297
beneficiary” does not include a person that is a beneficiary only because the person holds a 298
nongeneral power of appointment. 299
“(4) “Vested interest” means: 300
“(A) A right to a mandatory distribution that is a noncontingent right as of 301
the date of the exercise of the decanting power; 302
“(B) A current and noncontingent right, annually or more frequently, to a 303
mandatory distribution of income, a specified dollar amount, or a percentage of value of some or 304
all of the trust property; 305
“(C) A current and noncontingent right, annually or more frequently, to 306
withdraw income, a specified dollar amount, or a percentage of value of some or all of the trust 307
property; 308 ENGROSSED ORIGINAL
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“(D) A presently exercisable general power of appointment; or 309
“(E) A right to receive an ascertainable part of the trust property on the 310
trust’s termination which is not subject to the exercise of discretion or to the occurrence of a 311
specified event that is not certain to occur. 312
“(b) Subject to subsection (c) of this section and § 19- 1914, an authorized fiduciary that 313
has expanded distributive discretion over the principal of a first trust for the benefit of one or 314
more current beneficiaries may exercise the decanting power over the principal of the first trust. 315
“(c) Subject to § 19- 1913, in an exercise of the decanting power under this section, a 316
second trust may not: 317
“(1) Include as a current beneficiary a person that is not a current beneficiary of 318
the first trust, except as otherwise provided in subsection (d) of this section; 319
“(2) Include as a presumptive remainder beneficiary or successor beneficiary a 320
person that is not a current beneficiary, presumptive remainder beneficiary, or successor 321
beneficiary of the first trust, except as otherwise provided in subsection (d) of this section; or 322
“(3) Reduce or eliminate a vested interest. 323
“(d) Subject to subsection (c)(3) of this section and § 19- 1914, in an exercise of the 324
decanting power under this section, a second trust may be a trust created or administered under 325
the law of any jurisdiction and may: 326
“(1) Retain a power of appointment granted in the first trust; 327 ENGROSSED ORIGINAL
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“(2) Omit a power of appointment granted in the first trust, other than a presently 328
exercisable general power of appointment; 329
“(3) Create or modify a power of appointment if the powerholder is a current 330
beneficiary of the first trust and the authorized fiduciary has expanded distributive discretion to 331
distribute principal to the beneficiary; and 332
“(4) Create or modify a power of appointment if the powerholder is a presumptive 333
remainder beneficiary or successor beneficiary of the first trust, but the exercise of the power 334
may take effect only after the powerholder becomes, or would have become if then living, a 335
current beneficiary. 336
“(e) A power of appointment described in subsection (d)(1) through (4) of this section 337
may be general or nongeneral. The class of permissible appointees in favor of which the power 338
may be exercised may be broader than or different from the beneficiaries of the first trust. 339
“(f) If an authorized fiduciary has expanded distributive discretion over part but not all of 340
the principal of a first trust, the fiduciary may exercise the decanting power under this section 341
over that part of the principal over which the authorized fiduciary has expanded distributive 342
discretion. 343
Ҥ 19- 1912. Decanting power under limited distributive discretion. 344
“(a) For the purposes of this section, the term “limited distributive discretion” means a 345
discretionary power of distribution that is limited to an ascertainable standard or a reasonably 346
definite standard. 347 ENGROSSED ORIGINAL
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“(b) An authorized fiduciary that has limited distributive discretion over the principal of 348
the first trust for benefit of one or more current beneficiaries may exercise the decanting power 349
over the principal of the first trust. 350
“(c) Under this section and subject to § 19- 1914, a second trust may be created or 351
administered under the law of any jurisdiction. Under this section, the second trusts, in the 352
aggregate, must grant each beneficiary of the first trust beneficial interests which are 353
substantially similar to the beneficial interests of the beneficiary in the first trust. 354
“(d) A power to make a distribution under a second trust for the benefit of a beneficiary 355
who is an individual is substantially similar to a power under the first trust to make a distribution 356
directly to the beneficiary. A distribution is for the benefit of a beneficiary if: 357
“(1) The distribution is applied for the benefit of the beneficiary; 358
“(2) The beneficiary is under a legal disability or the trustee reasonably believes 359
the beneficiary is incapacitated, and the distribution is made as permitted under Chapter 13; or 360
“(3) The distribution is made as permitted under the terms of the first- trust 361
instrument and the second- trust instrument for the benefit of the beneficiary. 362
“(e) If an authorized fiduciary has limited distributive discretion over part but not all of 363
the principal of a first trust, the fiduciary may exercise the decanting power under this section 364
over that part of the principal over which the authorized fiduciary has limited distributive 365
discretion. 366
Ҥ 19- 1913. Trust for beneficiary with disability. 367 ENGROSSED ORIGINAL
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“(a) For the purposes of this section, the term: 368
“(1) “Beneficiary with a disability” means a beneficiary of a first trust who the 369
special-needs fiduciary believes may qualify for governmental benefits based on disability, 370
whether or not the beneficiary currently receives those benefits or is an individual who has been 371
adjudicated incompetent. 372
“(2) “Governmental benefits” means financial aid or services from a state, federal, 373
or other public agency. 374
“(3) “Special-needs fiduciary” means, with respect to a trust that has a beneficiary 375
with a disability: 376
“(A) A trustee or other fiduciary, other than a settlor, that has discretion to 377
distribute part or all of the principal of a first trust to one or more current beneficiaries; 378
“(B) If no trustee or fiduciary has discretion under subparagraph (A) of 379
this paragraph, a trustee or other fiduciary, other than a settlor, that has discretion to distribute 380
part or all of the income of the first trust to one or more current beneficiaries; or 381
“(C) If no trustee or fiduciary has discretion under subparagraphs (A) and 382
(B) of this paragraph, a trustee or other fiduciary, other than a settlor, that is required to distribute 383
part or all of the income or principal of the first trust to one or more current beneficiaries. 384
“(4) “Special-needs trust” means a trust the trustee believes would not be 385
considered a resource for purposes of determining whether a beneficiary with a disability is 386
eligible for governmental benefits. 387 ENGROSSED ORIGINAL
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“(b) A special-needs fiduciary may exercise the decanting power under § 19 -1911 over 388
the principal of a first trust as if the fiduciary had authority to distribute principal to a beneficiary 389
with a disability subject to expanded distributive discretion if: 390
“(1) A second trust is a special-needs trust that benefits the beneficiary with a 391
disability; and 392
“(2) The special-needs fiduciary determines that exercise of the decanting power 393
will further the purposes of the first trust. 394
“(c) In an exercise of the decanting power under this section, the following rules apply: 395
“(1) Notwithstanding § 19- 1911(c)(2), the interest in the second trust of a 396
beneficiary with a disability may: 397
“(A) Be a pooled trust as defined by Medicaid law for the benefit of the 398
beneficiary with a disability under 42 U.S.C. § 1396p(d)(4)(C); or 399
“(B) Contain payback provisions complying with reimbursement 400
requirements of Medicaid law under 42 U.S.C. § 1396p(d)(4)(A). 401
“(2) § 19- 1911(c)(3) does not apply to the interests of the beneficiary with a 402
disability. 403
“(3) Except as affected by any change to the interests of the beneficiary with a 404
disability, the second trust, or if there are two or more second trusts, the second trusts in the 405
aggregate, must grant each other beneficiary of the first trust beneficial interests in the second 406
trusts which are substantially similar to the beneficiary’s beneficial interests in the first trust. 407 ENGROSSED ORIGINAL
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Ҥ 19- 1914. Protection of charitable interest. 408
“(a) For the purposes of this section, the term: 409
“(1) “Determinable charitable interest” means a charitable interest that is a right to 410
a mandatory distribution currently, periodically, on the occurrence of a specified event, or after 411
the passage of a specified time and which is unconditional or will be held solely for charitable 412
purposes. 413
“(2) “Unconditional” means not subject to the occurrence of a specified event that 414
is not certain to occur, other than a requirement in a trust instrument that a charitable 415
organization be in existence or qualify under a particular provision of the United States Internal 416
Revenue Code of 1986 on the date of the distribution, if the charitable organization meets the 417
requirement on the date of determination. 418
“(b) If a first trust contains a determinable charitable interest, the Attorney General has 419
the rights of a qualified beneficiary and may represent and bind the charitable interest. 420
“(c) If a first trust contains a charitable interest, the second trust or trusts may not: 421
“(1) Diminish the charitable interest; 422
“(2) Diminish the interest of an identified charitable organization that holds the 423
charitable interest; 424
“(3) Alter any charitable purpose stated in the first-trust instrument; or 425
“(4) Alter any condition or restriction related to the charitable interest. 426 ENGROSSED ORIGINAL
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“(d) If there are 2 or more second trusts, the second trusts shall be treated as one trust for 427
purposes of determining whether the exercise of the decanting power diminishes the charitable 428
interest or diminishes the interest of an identified charitable organization for purposes of 429
subsection (c) of this section. 430
“(e) If a first trust contains a determinable charitable interest, the second trust or trusts 431
that include a charitable interest pursuant to subsection (c) of this section must be administered 432
under the law of the District unless: 433
“(1) The Attorney General, after receiving notice under § 19- 1907, fails to object 434
in a signed record delivered to the authorized fiduciary within the notice period; 435
“(2) The Attorney General consents in a signed record to the second trust or trusts 436
being administered under the law of another jurisdiction; or 437
“(3) The court approves the exercise of the decanting power. 438
“(f) This chapter does not limit the powers and duties of the Attorney General under law 439
of the District other than this chapter. 440
Ҥ 19- 1915. Trust limitation on decanting. 441
“(a) An authorized fiduciary may not exercise the decanting power to the extent the first-442
trust instrument expressly prohibits exercise of: 443
“(1) The decanting power; or 444
“(2) A power granted by state law to the fiduciary to distribute part or all of the 445
principal of the trust to another trust or to modify the trust. 446 ENGROSSED ORIGINAL
24
“(b) Exercise of the decanting power is subject to any restriction in the first-trust 447
instrument that expressly applies to exercise of: 448
“(1) The decanting power; or 449
“(2) A power granted by state law to a fiduciary to distribute part or all of the 450
principal of the trust to another trust or to modify the trust. 451
“(c) A general prohibition of the amendment or revocation of a first trust, a spendthrift 452
clause, or a clause restraining the voluntary or involuntary transfer of a beneficiary’s interest 453
does not preclude exercise of the de 454
“(d) Subject to subsections (a) and (b) of this section, an authorized fiduciary may 455
exercise the decanting power under this chapter even if the first-trust instrument permits the 456
authorized fiduciary or another person to modify the first-trust instrument or to distribute part or 457
all of the principal of the first trust to another trust. 458
“(e) If a first-trust instrument contains an express prohibition described in subsection (a) 459
of this section or an express restriction described in subsection (b) of this section, the provision 460
must be included in the second- trust instrument. 461
Ҥ 19- 1916. Change in compensation. 462
“(a) If a first-trust instrument specifies an authorized fiduciary’s compensation, the 463
fiduciary may not exercise the decanting power to increase the fiduciary’s compensation above 464
the specified compensation unless: 465 ENGROSSED ORIGINAL
25
“(1) All qualified beneficiaries of the second trust consent to the increase in a 466
signed record; or 467
“(2) The increase is approved by the court. 468
“(b) If a first-trust instrument does not specify an authorized fiduciary’s compensation, 469
the fiduciary may not exercise the decanting power to increase the fiduciary’s compensation 470
above the compensation permitted by Chapter 13 unless: 471
“(1) All qualified beneficiaries of the second trust consent to the increase in a 472
signed record; or 473
“(2) The increase is approved by the court. 474
“(c) A change in an authorized fiduciary’s compensation which is incidental to other 475
changes made by the exercise of the decanting power is not an increase in the fiduciary’s 476
compensation for the purposes of subsections (a) and (b) of this section. 477
Ҥ 19- 1917. Relief from liability and indemnification. 478
“(a) Except as otherwise provided in this section, a second- trust instrument may not 479
relieve an authorized fiduciary from liability for breach of trust to a greater extent than the first-480
trust instrument. 481
“(b) A second-trust instrument may provide for indemnification of an authorized 482
fiduciary of the first trust or another person acting in a fiduciary capacity under the first trust for 483
any liability or claim that would have been payable from the first trust if the decanting power had 484
not been exercised. 485 ENGROSSED ORIGINAL
26
“(c) A second-trust instrument may not reduce fiduciary liability in the aggregate. 486
“(d) Subject to subsection (c) of this section, a second- trust instrument may divide and 487
reallocate fiduciary powers among fiduciaries, including one or more trustees, distribution 488
advisors, investment advisors, trust protectors, or other persons, and relieve a fiduciary from 489
liability for an act or failure to act of another fiduciary as permitted by law of the District other 490
than this chapter. 491
Ҥ 19- 1918. Removal or replacement of authorized fiduciary. 492
“An authorized fiduciary may not exercise the decanting power to modify a provision in a 493
first-trust instrument granting another person power to remove or replace the fiduciary unless: 494
“(1) The person holding the power consents to the modification in a signed record 495
and the modification applies only to the person; 496
“(2) The person holding the power and the qualified beneficiaries of the second 497
trust consent to the modification in a signed record and the modification grants a substantially 498
similar power to another person; or 499
“(3) The court approves the modification and the modification grants a 500
substantially similar power to another person. 501
Ҥ 19- 1919. Tax-related limitations. 502
“(a) For the purposes of this section, the term: 503
“(1) “Grantor trust” means a trust as to which a settlor of a first trust is considered 504
the owner under 26 U.S.C. §§ 671 through 677 or 26 U.S.C. § 679. 505 ENGROSSED ORIGINAL
27
“(2) “Internal Revenue Code” means the United States Internal Revenue Code of 506
1986. 507
“(3) “Nongrantor trust” means a trust that is not a grantor trust. 508
“(4) “Qualified benefits property” means property subject to the minimum 509
distribution requirements of 26 U.S.C. § 401(a)(9), and any applicable regulations, or to any 510
similar requirements that refer to 26 U.S.C. § 401(a)(9) or the regulations. 511
“(b) An exercise of the decanting power is subject to the following limitations: 512
“(1) If a first trust contains property that qualified, or would have qualified but for 513
provisions of this chapter other than this section, for a marital deduction for purposes of the gift 514
or estate tax under the Internal Revenue Code or a state gift, estate, or inheritance tax, the 515
second-trust instrument must not include or omit any term that, if included in or omitted from the 516
trust instrument for the trust to which the property was transferred, would have prevented the 517
transfer from qualifying for the deduction, or would have reduced the amount of the deduction, 518
under the same provisions of the Internal Revenue Code or state law under which the transfer 519
qualified. 520
“(2) If the first trust contains property that qualified, or would have qualified but 521
for provisions of this chapter other than this section, for a charitable deduction for purposes of 522
the income, gift, or estate tax under the Internal Revenue Code or a state income, gift, estate, or 523
inheritance tax, the second-trust instrument must not include or omit any term that, if included in 524
or omitted from the trust instrument for the trust to which the property was transferred, would 525 ENGROSSED ORIGINAL
28
have prevented the transfer from qualifying for the deduction, or would have reduced the amount 526
of the deduction, under the same provisions of the Internal Revenue Code or state law under 527
which the transfer qualified. 528
“(3) If the first trust contains property that qualified, or would have qualified but 529
for provisions of this chapter other than this section, for the exclusion from the gift tax described 530
in 26 U.S.C. § 2503(b), the second- trust instrument must not include or omit a term that, if 531
included in or omitted from the trust instrument for the trust to which the property was 532
transferred, would have prevented the transfer from qualifying under 26 U.S.C. § 2503(b). If the 533
first trust contains property that qualified, or would have qualified but for provisions of this 534
chapter other than this section, for the exclusion from the gift tax described in 26 U.S.C. § 535
2503(b) by application of 26 U.S.C. § 2503(c), the second- trust instrument must not include or 536
omit a term that, if included or omitted from the trust instrument for the trust to which the 537
property was transferred, would have prevented the transfer from qualifying under 26 U.S.C. § 538
2503(c). 539
“(4) If the property of the first trust includes shares of stock in an S corporation, 540
as defined in 26 U.S.C. § 1361 and the first trust is, or but for provisions of this chapter other 541
than this section would be, a permitted shareholder under any provision of 26 U.S.C. § 1361, an 542
authorized fiduciary may exercise the power with respect to part or all of the S-corporation stock 543
only if any second trust receiving the stock is a permitted shareholder under 26 U.S.C. § 544
1361(c)(2). If the property of the first trust includes shares of stock in an S corporation and the 545 ENGROSSED ORIGINAL
29
first trust is, or but for provisions of this chapter other than this section would be, a qualified 546
subchapter-S trust within the meaning of 26 U.S.C. § 1361(d), the second- trust instrument must 547
not include or omit a term that prevents the second trust from qualifying as a qualified 548
subchapter-S trust. 549
“(5) If the first trust contains property that qualified, or would have qualified but 550
for provisions of this chapter other than this section, for a zero inclusion ratio for purposes of the 551
generation-skipping transfer tax under 26 U.S.C. § 2642(c), the second- trust instrument must not 552
include or omit a term that, if included in or omitted from the first- trust instrument, would have 553
prevented the transfer to the first trust from qualifying for a zero inclusion ratio under 26 U.S.C. 554
§ 2642(c). 555
“(6) If the first trust is directly or indirectly the beneficiary of qualified benefits 556
property, the second- trust instrument may not include or omit any term that, if included in or 557
omitted from the first- trust instrument, would have increased the minimum distributions required 558
with respect to the qualified benefits property under 26 U.S.C. § 401(a)(9) and any applicable 559
regulations, or any similar requirements that refer to 26 U.S.C. § 401(a)(9) or the regulations. If 560
an attempted exercise of the decanting power violates the preceding sentence, the trustee is 561
deemed to have held the qualified benefits property and any reinvested distributions of the 562
property as a separate share from the date of the exercise of the power and § 19-1922 applies to 563
the separate share. 564 ENGROSSED ORIGINAL
30
“(7) If the first trust qualifies as a grantor trust because of the application of 26 565
U.S.C. § 672(f)(2)(A), the second trust may not include or omit a term that, if included in or 566
omitted from the first- trust instrument, would have prevented the first trust from qualifying under 567
26 U.S.C. § 672(f)(2)(A). 568
“(8) For the purposes of this paragraph, the term “tax benefit” means a federal or 569
state tax deduction, exemption, exclusion, or other benefit not otherwise listed in this section, 570
except for a benefit arising from being a grantor trust. Subject to paragraph (9) of this 571
subsection, a second-trust instrument may not include or omit a term that, if included in or 572
omitted from the first- trust instrument, would have prevented qualification for a tax benefit if: 573
“(A) The first-trust instrument expressly indicates an intent to qualify for 574
the benefit or the first-trust instrument clearly is designed to enable the first trust to qualify for 575
the benefit; and 576
“(B) The transfer of property held by the first trust or the first trust 577
qualified, or but for provisions of this chapter other than this section, would have qualified for 578
the tax benefit. 579
“(9) Subject to paragraph (4) of this subsection: 580
“(A) Except as otherwise provided in paragraph (7) of this subsection, the 581
second trust may be a nongrantor trust, even if the first trust is a grantor trust; and 582
“(B) Except as otherwise provided in paragraph (10) of this subsection, the 583
second trust may be a grantor trust, even if the first trust is a nongrantor trust. 584 ENGROSSED ORIGINAL
31
“(10) An authorized fiduciary may not exercise the decanting power if a settlor 585
objects in a signed record delivered to the fiduciary within the notice period and: 586
“(A) The first trust and a second trust are both grantor trusts, in whole or 587
in part, the first trust grants the settlor or another person the power to cause the second trust to 588
cease to be a grantor trust, and the second trust does not grant an equivalent power to the settlor 589
or other person; or 590
“(B) The first trust is a nongrantor trust and a second trust is a grantor 591
trust, in whole or in part, with respect to the settlor, unless: 592
“(i) The settlor has the power at all times to cause the second trust 593
to cease to be a grantor trust; or 594
“(ii) The first-trust instrument contains a provision granting the 595
settlor or another person a power that would cause the first trust to cease to be a grantor trust and 596
the second-trust instrument contains the same provision. 597
Ҥ 19- 1920. Duration of second trust. 598
“(a) Subject to subsection (b) of this section, a second trust may have a duration that is 599
the same as or different from the duration of the first trust. 600
“(b) To the extent that property of a second trust is attributable to property of the first 601
trust, the property of the second trust is subject to any rules governing maximum perpetuity, 602
accumulation, or suspension of the power of alienation which apply to property of the first trust. 603
Ҥ 19- 1921. Need to distribute not required. 604 ENGROSSED ORIGINAL
32
“An authorized fiduciary may exercise the decanting power whether or not under the first 605
trust’s discretionary distribution standard the fiduciary would have made or could have been 606
compelled to make a discretionary distribution of principal at the time of the exercise. 607
Ҥ 19- 1922. Saving provision. 608
“(a) If exercise of the decanting power would be effective under this chapter except that 609
the second-trust instrument in part does not comply with this chapter, the exercise of the power is 610
effective and the following rules apply with respect to the principal of the second trust 611
attributable to the exercise of the power: 612
“(1) A provision in the second- trust instrument which is not permitted under this 613
chapter is void to the extent necessary to comply with this chapter; and 614
“(2) A provision required by this chapter to be in the second- trust instrument 615
which is not contained in the instrument is deemed to be included in the instrument to the extent 616
necessary to comply with this chapter. 617
“(b) If a trustee or other fiduciary of a second trust determines that subsection (a) of this 618
section applies to a prior exercise of the decanting power, the fiduciary shall take corrective 619
action consistent with the fiduciary’s duties. 620
Ҥ 19- 1923. Trust for care of animal. 621
“(a) For the purposes of this section, the term: 622
“(1) “Animal trust” means a trust or an interest in a trust created to provide for the 623
care of one or more animals. 624 ENGROSSED ORIGINAL
33
“(2) “Protector” means a person appointed in an animal trust to enforce the trust 625
on behalf of the animal or, if no such person is appointed in the trust, a person appointed by the 626
court for that purpose. 627
“(b) The decanting power may be exercised over an animal trust that has a protector to 628
the extent the trust could be decanted under this chapter if each animal that benefits from the 629
trust were an individual, if the protector consents in a signed record to the exercise of the power. 630
“(c) A protector for an animal has the rights under this chapter of a qualified beneficiary. 631
“(d) Notwithstanding any other provision of this chapter, if a first trust is an animal trust, 632
in an exercise of the decanting power, the second trust must provide that trust property may be 633
applied only to its intended purpose for the period the first trust benefitted the animal. 634
Ҥ 19- 1924. Terms of second trust. 635
“A reference in Chapter 13 to a trust instrument or terms of the trust includes a second-636
trust instrument and the terms of the second trust. 637
Ҥ 19- 1925. Settlor. 638
“(a) For the purposes of law of the District other than this chapter and subject to 639
subsection (b) of this section, a settlor of a first trust is deemed to be the settlor of the second 640
trust with respect to the portion of the principal of the first trust subject to the exercise of the 641
decanting power. 642
“(b) In determining settlor intent with respect to a second trust, the intent of a settlor of 643
the first trust, a settlor of the second trust, and the authorized fiduciary may be considered. 644 ENGROSSED ORIGINAL
34
Ҥ 19- 1926. Later-discovered property. 645
“(a) Except as otherwise provided in subsection (c) of this section, if exercise of the 646
decanting power was intended to distribute all the principal of the first trust to one or more 647
second trusts, later-discovered property belonging to the first trust and property paid to or 648
acquired by the first trust after the exercise of the power is part of the trust estate of the second 649
trust or trusts. 650
“(b) Except as otherwise provided in subsection (c) of this section, if exercise of the 651
decanting power was intended to distribute less than all the principal of the first trust to one or 652
more second trusts, later-discovered property belonging to the first trust or property paid to or 653
acquired by the first trust after exercise of the power remains part of the trust estate of the first 654
trust. 655
“(c) An authorized fiduciary may provide in an exercise of the decanting power or by the 656
terms of a second trust for disposition of later-discovered property belonging to the first trust or 657
property paid to or acquired by the first trust after exercise of the power. 658
Ҥ19-1927. Obligations. 659
“A debt, liability, or other obligation enforceable against property of a first trust is 660
enforceable to the same extent against the property when held by the second trust after exercise 661
of the decanting power. 662
Ҥ 19- 1928. Uniformity of application and construction. 663 ENGROSSED ORIGINAL
35
“In applying and construing this chapter, consideration must be given to the need to 664
promote uniformity of the law with respect to its subject matter among states that enact it. 665
Ҥ 19- 1929. Relation to electronic signatures in global and national commerce act. 666
“This chapter modifies, limits, or supersedes the Electronic Signatures in Global and 667
National Commerce Act, approved June 30, 2000 (114 Stat. 464; 15 U.S.C. § 7001 et seq. ), but 668
does not modify, limit, or supersede section 101(c) of that act (15 U.S.C. § 7001(c)), or authorize 669
electronic delivery of any of the notices described in section 103(b) of that act (15 U.S.C. § 670
7003(b)).”. 671
Sec. 3. Fiscal impact statement. 672
The Council adopts the fiscal impact statement in the committee report as the fiscal 673
impact statement required by section 4a of the General Legislative Procedures Act of 1975, 674
approved October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1- 301.47a). 675
Sec. 4. Effective date. 676
This act shall take effect following approval by the Mayor (or in the event of veto by the 677
Mayor, action by the Council to override the veto), a 30- day period of congressional review as 678
provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 679
24, 1973 (87 Stat. 813; D.C. Official Code § 1- 206.02(c)(1)). 680