{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/64.2-779.16.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/64.2-779.16.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/64.2-779.16.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/64.2-779.16.html"}],"law_id":55584,"edition_id":1,"section_id":55584,"structure_id":13034,"section_number":"64.2-779.16","catch_line":"Tax-related provisions","history":"2017, c. 592.","full_text":"A\n\nAs used in this section:\n\t\t\t“Grantor trust” means a trust as to which a settlor of a first trust is considered the owner under §§ 671 through 677 of the Internal Revenue Code or § 679 of the Internal Revenue Code.\n\t\t\t“Internal Revenue Code” means the United States Internal Revenue Code of 1986.\n\t\t\t“Nongrantor trust” means a trust that is not a grantor trust.\n\t\t\t“Qualified benefits property” means property subject to the minimum distribution requirements of § 401(a)(9) of the Internal Revenue Code and any applicable regulations, or to any similar requirements that refer to § 401(a)(9) of the Internal Revenue Code or the regulations.B\n\nAn exercise of the decanting power is subject to the following limitations:1\n\nIf a first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for a marital deduction for purposes of the gift or estate tax under the Internal Revenue Code or a state gift, estate, or inheritance tax, the second-trust instrument must not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified.2\n\nIf the first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for a charitable deduction for purposes of the income, gift, or estate tax under the Internal Revenue Code or a state income, gift, estate, or inheritance tax, the second-trust instrument must not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified.3\n\nIf the first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for the exclusion from the gift tax described in § 2503(b) of the Internal Revenue Code, the second-trust instrument must not include or omit a term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under § 2503(b) of the Internal Revenue Code. If the first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for the exclusion from the gift tax described in § 2503(b) of the Internal Revenue Code by application of § 2503(c) of the Internal Revenue Code, the second-trust instrument must not include or omit a term that, if included or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under § 2503(c) of the Internal Revenue Code.4\n\nIf the property of the first trust includes shares of stock in an S corporation, as defined in § 1361 of the Internal Revenue Code, and the first trust is, or but for provisions of this article other than this section would be, a permitted shareholder under any provision of § 1361 of the Internal Revenue Code, an authorized fiduciary may exercise the power with respect to part or all of the S-corporation stock only if any second trust receiving the stock is a permitted shareholder under § 1361(c)(2) of the Internal Revenue Code. If the property of the first trust includes shares of stock in an S corporation and the first trust is, or but for provisions of this article other than this section would be, a qualified subchapter-S trust within the meaning of § 1361(d) of the Internal Revenue Code, the second-trust instrument must not include or omit a term that prevents the second trust from qualifying as a qualified subchapter-S trust.5\n\nIf the first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for a zero inclusion ratio for purposes of the generation-skipping transfer tax under § 2642(c) of the Internal Revenue Code the second-trust instrument must not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented the transfer to the first trust from qualifying for a zero inclusion ratio under § 2642(c) of the Internal Revenue Code.6\n\nIf the first trust is directly or indirectly the beneficiary of qualified benefits property, the second-trust instrument may not include or omit any term that, if included in or omitted from the first-trust instrument, would have increased the minimum distributions required with respect to the qualified benefits property under § 401(a)(9) of the Internal Revenue Code and any applicable regulations, or any similar requirements that refer to § 401(a)(9) of the Internal Revenue Code or the regulations. If an attempted exercise of the decanting power violates the preceding sentence, the trustee is deemed to have held the qualified benefits property and any reinvested distributions of the property as a separate share from the date of the exercise of the power, and § 64.2-779.19 applies to the separate share.7\n\nIf the first trust qualifies as a grantor trust because of the application of § 672(f)(2)(A) of the Internal Revenue Code, the second trust may not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented the first trust from qualifying under § 672(f)(2)(A) of the Internal Revenue Code.8\n\nIn this subdivision, “tax benefit” means a federal or state tax deduction, exemption, exclusion, or other benefit not otherwise listed in this section, except for a benefit arising from being a grantor trust. Subject to subdivision 9, a second-trust instrument may not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented qualification for a tax benefit if:\n\t\t\t\ta. The first-trust instrument expressly indicates an intent to qualify for the benefit or the first-trust instrument clearly is designed to enable the first trust to qualify for the benefit; and\n\t\t\t\tb. The transfer of property held by the first trust or the first trust qualified, or would have qualified but for provisions of this article other than this section, would have qualified for the tax benefit.9\n\nSubject to subdivision 4:\n\t\t\t\ta. Except as otherwise provided in subdivision 7, the second trust may be a nongrantor trust, even if the first trust is a grantor trust; and\n\t\t\t\tb. Except as otherwise provided in subdivision 10, the second trust may be a grantor trust, even if the first trust is a nongrantor trust.10\n\nAn authorized fiduciary may not exercise the decanting power if a settlor objects in a signed record delivered to the fiduciary within the notice period and:\n\t\t\t\ta. The first trust and a second trust are both grantor trusts, in whole or in part, the first-trust instrument grants the settlor or another person the power to cause the first trust to cease to be a grantor trust, and the second-trust instrument does not grant an equivalent power to the settlor or other person; or\n\t\t\t\tb. The first trust is a nongrantor trust and a second trust is a grantor trust, in whole or in part, with respect to the settlor, unless:1\n\nThe settlor has the power at all times to cause the second trust to cease to be a grantor trust; or2\n\nThe first-trust instrument contains a provision granting the settlor or another person a power that would cause the first trust to cease to be a grantor trust and the second-trust instrument contains the same provision.C\n\nIf an authorized fiduciary that has limited distributive discretion over the income or principal of a first trust reasonably determines that the overall income, estate, gift, and generation-skipping tax consequences of the first trust may be reduced by either (i) granting a general power of appointment to a beneficiary of the first trust or (ii) eliminating a general power of appointment granted to a beneficiary of the first trust, the fiduciary may exercise the decanting power over all or any portion of the principal of the trust to grant or eliminate such a general power of appointment and shall, in addition, have the powers found in subsection D of \u00a7 64.2-779.8 as if the fiduciary had expanded distributive discretion, subject to the following provisions:1\n\nIn the case of the grant of a general power of appointment, the class of permissible appointees contained in the second trust shall be limited to the creditors of the powerholder or the creditors of the powerholder’s estate.2\n\nIn the case of the elimination of a general power of appointment, the class of permissible appointees in the second trust shall exclude the powerholder, the powerholder’s creditors, the powerholder’s estate, and the creditors of the powerholder’s estate, but shall otherwise be identical to the class of appointees permitted in the first trust.","order_by":null,"text":{"0":{"id":203753,"text":"As used in this section:\n\t\t\t“Grantor trust” means a trust as to which a settlor of a first trust is considered the owner under §§ 671 through 677 of the Internal Revenue Code or § 679 of the Internal Revenue Code.\n\t\t\t“Internal Revenue Code” means the United States Internal Revenue Code of 1986.\n\t\t\t“Nongrantor trust” means a trust that is not a grantor trust.\n\t\t\t“Qualified benefits property” means property subject to the minimum distribution requirements of § 401(a)(9) of the Internal Revenue Code and any applicable regulations, or to any similar requirements that refer to § 401(a)(9) of the Internal Revenue Code or the regulations.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":203754,"text":"An exercise of the decanting power is subject to the following limitations:","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"B1"},"2":{"id":203755,"text":"If a first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for a marital deduction for purposes of the gift or estate tax under the Internal Revenue Code or a state gift, estate, or inheritance tax, the second-trust instrument must not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified.","type":"section","prefixes":["B","1"],"prefix":"1","entire_prefix":"B1","prefix_anchor":"B1","level":2,"prior_prefix":"B","next_prefix":"B2"},"3":{"id":203756,"text":"If the first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for a charitable deduction for purposes of the income, gift, or estate tax under the Internal Revenue Code or a state income, gift, estate, or inheritance tax, the second-trust instrument must not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified.","type":"section","prefixes":["B","2"],"prefix":"2","entire_prefix":"B2","prefix_anchor":"B2","level":2,"prior_prefix":"B1","next_prefix":"B3"},"4":{"id":203757,"text":"If the first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for the exclusion from the gift tax described in § 2503(b) of the Internal Revenue Code, the second-trust instrument must not include or omit a term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under § 2503(b) of the Internal Revenue Code. If the first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for the exclusion from the gift tax described in § 2503(b) of the Internal Revenue Code by application of § 2503(c) of the Internal Revenue Code, the second-trust instrument must not include or omit a term that, if included or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under § 2503(c) of the Internal Revenue Code.","type":"section","prefixes":["B","3"],"prefix":"3","entire_prefix":"B3","prefix_anchor":"B3","level":2,"prior_prefix":"B2","next_prefix":"B4"},"5":{"id":203758,"text":"If the property of the first trust includes shares of stock in an S corporation, as defined in § 1361 of the Internal Revenue Code, and the first trust is, or but for provisions of this article other than this section would be, a permitted shareholder under any provision of § 1361 of the Internal Revenue Code, an authorized fiduciary may exercise the power with respect to part or all of the S-corporation stock only if any second trust receiving the stock is a permitted shareholder under § 1361(c)(2) of the Internal Revenue Code. If the property of the first trust includes shares of stock in an S corporation and the first trust is, or but for provisions of this article other than this section would be, a qualified subchapter-S trust within the meaning of § 1361(d) of the Internal Revenue Code, the second-trust instrument must not include or omit a term that prevents the second trust from qualifying as a qualified subchapter-S trust.","type":"section","prefixes":["B","4"],"prefix":"4","entire_prefix":"B4","prefix_anchor":"B4","level":2,"prior_prefix":"B3","next_prefix":"B5"},"6":{"id":203759,"text":"If the first trust contains property that qualified, or would have qualified but for provisions of this article other than this section, for a zero inclusion ratio for purposes of the generation-skipping transfer tax under § 2642(c) of the Internal Revenue Code the second-trust instrument must not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented the transfer to the first trust from qualifying for a zero inclusion ratio under § 2642(c) of the Internal Revenue Code.","type":"section","prefixes":["B","5"],"prefix":"5","entire_prefix":"B5","prefix_anchor":"B5","level":2,"prior_prefix":"B4","next_prefix":"B6"},"7":{"id":203760,"text":"If the first trust is directly or indirectly the beneficiary of qualified benefits property, the second-trust instrument may not include or omit any term that, if included in or omitted from the first-trust instrument, would have increased the minimum distributions required with respect to the qualified benefits property under § 401(a)(9) of the Internal Revenue Code and any applicable regulations, or any similar requirements that refer to § 401(a)(9) of the Internal Revenue Code or the regulations. If an attempted exercise of the decanting power violates the preceding sentence, the trustee is deemed to have held the qualified benefits property and any reinvested distributions of the property as a separate share from the date of the exercise of the power, and § 64.2-779.19 applies to the separate share.","type":"section","prefixes":["B","6"],"prefix":"6","entire_prefix":"B6","prefix_anchor":"B6","level":2,"prior_prefix":"B5","next_prefix":"B7"},"8":{"id":203761,"text":"If the first trust qualifies as a grantor trust because of the application of § 672(f)(2)(A) of the Internal Revenue Code, the second trust may not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented the first trust from qualifying under § 672(f)(2)(A) of the Internal Revenue Code.","type":"section","prefixes":["B","7"],"prefix":"7","entire_prefix":"B7","prefix_anchor":"B7","level":2,"prior_prefix":"B6","next_prefix":"B8"},"9":{"id":203762,"text":"In this subdivision, “tax benefit” means a federal or state tax deduction, exemption, exclusion, or other benefit not otherwise listed in this section, except for a benefit arising from being a grantor trust. Subject to subdivision 9, a second-trust instrument may not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented qualification for a tax benefit if:\n\t\t\t\ta. The first-trust instrument expressly indicates an intent to qualify for the benefit or the first-trust instrument clearly is designed to enable the first trust to qualify for the benefit; and\n\t\t\t\tb. The transfer of property held by the first trust or the first trust qualified, or would have qualified but for provisions of this article other than this section, would have qualified for the tax benefit.","type":"section","prefixes":["B","8"],"prefix":"8","entire_prefix":"B8","prefix_anchor":"B8","level":2,"prior_prefix":"B7","next_prefix":"B9"},"10":{"id":203763,"text":"Subject to subdivision 4:\n\t\t\t\ta. Except as otherwise provided in subdivision 7, the second trust may be a nongrantor trust, even if the first trust is a grantor trust; and\n\t\t\t\tb. Except as otherwise provided in subdivision 10, the second trust may be a grantor trust, even if the first trust is a nongrantor trust.","type":"section","prefixes":["B","9"],"prefix":"9","entire_prefix":"B9","prefix_anchor":"B9","level":2,"prior_prefix":"B8","next_prefix":"B10"},"11":{"id":203764,"text":"An authorized fiduciary may not exercise the decanting power if a settlor objects in a signed record delivered to the fiduciary within the notice period and:\n\t\t\t\ta. The first trust and a second trust are both grantor trusts, in whole or in part, the first-trust instrument grants the settlor or another person the power to cause the first trust to cease to be a grantor trust, and the second-trust instrument does not grant an equivalent power to the settlor or other person; or\n\t\t\t\tb. The first trust is a nongrantor trust and a second trust is a grantor trust, in whole or in part, with respect to the settlor, unless:","type":"section","prefixes":["B","10"],"prefix":"10","entire_prefix":"B10","prefix_anchor":"B10","level":2,"prior_prefix":"B9","next_prefix":"B101"},"12":{"id":203765,"text":"The settlor has the power at all times to cause the second trust to cease to be a grantor trust; or","type":"section","prefixes":["B","10","1"],"prefix":"1","entire_prefix":"B101","prefix_anchor":"B101","level":3,"prior_prefix":"B10","next_prefix":"B102"},"13":{"id":203766,"text":"The first-trust instrument contains a provision granting the settlor or another person a power that would cause the first trust to cease to be a grantor trust and the second-trust instrument contains the same provision.","type":"section","prefixes":["B","10","2"],"prefix":"2","entire_prefix":"B102","prefix_anchor":"B102","level":3,"prior_prefix":"B101","next_prefix":"C"},"14":{"id":203767,"text":"If an authorized fiduciary that has limited distributive discretion over the income or principal of a first trust reasonably determines that the overall income, estate, gift, and generation-skipping tax consequences of the first trust may be reduced by either (i) granting a general power of appointment to a beneficiary of the first trust or (ii) eliminating a general power of appointment granted to a beneficiary of the first trust, the fiduciary may exercise the decanting power over all or any portion of the principal of the trust to grant or eliminate such a general power of appointment and shall, in addition, have the powers found in subsection D of \u00a7 64.2-779.8 as if the fiduciary had expanded distributive discretion, subject to the following provisions:","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B102","next_prefix":"C1"},"15":{"id":203768,"text":"In the case of the grant of a general power of appointment, the class of permissible appointees contained in the second trust shall be limited to the creditors of the powerholder or the creditors of the powerholder’s estate.","type":"section","prefixes":["C","1"],"prefix":"1","entire_prefix":"C1","prefix_anchor":"C1","level":2,"prior_prefix":"C","next_prefix":"C2"},"16":{"id":203769,"text":"In the case of the elimination of a general power of appointment, the class of permissible appointees in the second trust shall exclude the powerholder, the powerholder’s creditors, the powerholder’s estate, and the creditors of the powerholder’s estate, but shall otherwise be identical to the class of appointees permitted in the first trust.","type":"section","prefixes":["C","2"],"prefix":"2","entire_prefix":"C2","prefix_anchor":"C2","level":2,"prior_prefix":"C1"}},"ancestry":[{"id":13034,"edition_id":1,"name":"Uniform Trust Decanting Act","identifier":"8.1","label":"article","depth":4,"order_by":1,"parent_id":12725,"metadata":{},"date_created":"2026-06-26 03:44:10","date_modified":"2026-06-26 03:44:10","permalink":{"id":274529,"object_type":"structure","relational_id":13034,"identifier":"8.1","token":"64.2\/III\/7\/8.1","url":"\/64.2\/III\/7\/8.1\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12725,"edition_id":1,"name":"Uniform Trust Code","identifier":"7","label":"chapter","depth":3,"order_by":1,"parent_id":12724,"metadata":{},"date_created":"2026-06-26 03:43:50","date_modified":"2026-06-26 03:43:50","permalink":{"id":274107,"object_type":"structure","relational_id":12725,"identifier":"7","token":"64.2\/III\/7","url":"\/64.2\/III\/7\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12724,"edition_id":1,"name":"Trusts","identifier":"III","label":"subtitle","depth":2,"order_by":1,"parent_id":12723,"metadata":{},"date_created":"2026-06-26 03:43:50","date_modified":"2026-06-26 03:43:50","permalink":{"id":273811,"object_type":"structure","relational_id":12724,"identifier":"III","token":"64.2\/III","url":"\/64.2\/III\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12723,"edition_id":1,"name":"Wills, Trusts, and Fiduciaries","identifier":"64.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:50","date_modified":"2026-06-26 03:43:50","permalink":{"id":272781,"object_type":"structure","relational_id":12723,"identifier":"64.2","token":"64.2","url":"\/64.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":69107,"structure_id":13034,"section_number":"64.2-779.1","catch_line":"Scope","url":"\/64.2-779.1\/","token":"64.2\/III\/7\/8.1\/64.2-779.1","metadata":false},{"id":60630,"structure_id":13034,"section_number":"64.2-779.10","catch_line":"Trust for beneficiary with disability","url":"\/64.2-779.10\/","token":"64.2\/III\/7\/8.1\/64.2-779.10","metadata":false},{"id":76498,"structure_id":13034,"section_number":"64.2-779.11","catch_line":"Protection of charitable interest","url":"\/64.2-779.11\/","token":"64.2\/III\/7\/8.1\/64.2-779.11","metadata":false},{"id":56684,"structure_id":13034,"section_number":"64.2-779.12","catch_line":"Trust limitation on decanting","url":"\/64.2-779.12\/","token":"64.2\/III\/7\/8.1\/64.2-779.12","metadata":false},{"id":70803,"structure_id":13034,"section_number":"64.2-779.13","catch_line":"Change in compensation","url":"\/64.2-779.13\/","token":"64.2\/III\/7\/8.1\/64.2-779.13","metadata":false},{"id":78277,"structure_id":13034,"section_number":"64.2-779.14","catch_line":"Relief from liability and indemnification","url":"\/64.2-779.14\/","token":"64.2\/III\/7\/8.1\/64.2-779.14","metadata":false},{"id":57442,"structure_id":13034,"section_number":"64.2-779.15","catch_line":"Removal or replacement of authorized fiduciary","url":"\/64.2-779.15\/","token":"64.2\/III\/7\/8.1\/64.2-779.15","metadata":false},{"id":55584,"structure_id":13034,"section_number":"64.2-779.16","catch_line":"Tax-related provisions","url":"\/64.2-779.16\/","token":"64.2\/III\/7\/8.1\/64.2-779.16","metadata":false},{"id":80667,"structure_id":13034,"section_number":"64.2-779.17","catch_line":"Duration of second trust","url":"\/64.2-779.17\/","token":"64.2\/III\/7\/8.1\/64.2-779.17","metadata":false},{"id":77406,"structure_id":13034,"section_number":"64.2-779.18","catch_line":"Need to distribute not required","url":"\/64.2-779.18\/","token":"64.2\/III\/7\/8.1\/64.2-779.18","metadata":false},{"id":54098,"structure_id":13034,"section_number":"64.2-779.19","catch_line":"Savings provision","url":"\/64.2-779.19\/","token":"64.2\/III\/7\/8.1\/64.2-779.19","metadata":false},{"id":64836,"structure_id":13034,"section_number":"64.2-779.2","catch_line":"Fiduciary 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property","url":"\/64.2-779.23\/","token":"64.2\/III\/7\/8.1\/64.2-779.23","metadata":false},{"id":85955,"structure_id":13034,"section_number":"64.2-779.24","catch_line":"Obligations","url":"\/64.2-779.24\/","token":"64.2\/III\/7\/8.1\/64.2-779.24","metadata":false},{"id":79769,"structure_id":13034,"section_number":"64.2-779.25","catch_line":"Accountings","url":"\/64.2-779.25\/","token":"64.2\/III\/7\/8.1\/64.2-779.25","metadata":false},{"id":60927,"structure_id":13034,"section_number":"64.2-779.3","catch_line":"Application; governing law","url":"\/64.2-779.3\/","token":"64.2\/III\/7\/8.1\/64.2-779.3","metadata":false},{"id":67126,"structure_id":13034,"section_number":"64.2-779.4","catch_line":"Reasonable reliance","url":"\/64.2-779.4\/","token":"64.2\/III\/7\/8.1\/64.2-779.4","metadata":false},{"id":84001,"structure_id":13034,"section_number":"64.2-779.5","catch_line":"Notice; exercise of decanting power","url":"\/64.2-779.5\/","token":"64.2\/III\/7\/8.1\/64.2-779.5","metadata":false},{"id":86465,"structure_id":13034,"section_number":"64.2-779.6","catch_line":"Court involvement","url":"\/64.2-779.6\/","token":"64.2\/III\/7\/8.1\/64.2-779.6","metadata":false},{"id":68820,"structure_id":13034,"section_number":"64.2-779.7","catch_line":"Formalities","url":"\/64.2-779.7\/","token":"64.2\/III\/7\/8.1\/64.2-779.7","metadata":false},{"id":79506,"structure_id":13034,"section_number":"64.2-779.8","catch_line":"Decanting power under expanded distributive discretion","url":"\/64.2-779.8\/","token":"64.2\/III\/7\/8.1\/64.2-779.8","metadata":false},{"id":77579,"structure_id":13034,"section_number":"64.2-779.9","catch_line":"Decanting power under limited distributive discretion","url":"\/64.2-779.9\/","token":"64.2\/III\/7\/8.1\/64.2-779.9","metadata":false}],"previous_section":{"id":57442,"structure_id":13034,"section_number":"64.2-779.15","catch_line":"Removal or replacement of authorized fiduciary","url":"\/64.2-779.15\/","token":"64.2\/III\/7\/8.1\/64.2-779.15","metadata":false},"next_section":{"id":80667,"structure_id":13034,"section_number":"64.2-779.17","catch_line":"Duration of second trust","url":"\/64.2-779.17\/","token":"64.2\/III\/7\/8.1\/64.2-779.17","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/64.2-779.16\/","history_text":"

This law was first created in 2017. The record of its establishment is cataloged in chapter 592<\/a> of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year.<\/p>","references":false,"refers_to":[{"id":54098,"section_number":"64.2-779.19","catch_line":"Savings provision","order_by":null,"url":"\/64.2-779.19\/"},{"id":79506,"section_number":"64.2-779.8","catch_line":"Decanting power under expanded distributive discretion","order_by":null,"url":"\/64.2-779.8\/"}],"permalink":{"id":274559,"object_type":"law","relational_id":55584,"identifier":"64.2-779.16","token":"64.2\/III\/7\/8.1\/64.2-779.16","url":"\/64.2-779.16\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/64.2-779.16\/","token":"64.2\/III\/7\/8.1\/64.2-779.16","dublin_core":{"Title":"Tax-related provisions","Type":"Text","Format":"text\/html","Identifier":"\u00a7 64.2-779.16","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> As used in this section:\n\t\t\t“Grantor trust<\/span>” means a trust as to which a settlor of a first trust<\/span> is considered the owner under §§ 671 through 677 of the Internal Revenue Code<\/span> or § 679 of the Internal Revenue Code<\/span>.\n\t\t\t“Internal Revenue Code<\/span>” means the United States<\/span> Internal Revenue Code<\/span> of 1986.\n\t\t\t“Nongrantor trust<\/span>” means a trust that is not a grantor trust<\/span>.\n\t\t\t“Qualified benefits property<\/span>” means property subject to the minimum distribution requirements of § 401(a)(9) of the Internal Revenue Code<\/span> and any applicable regulations, or to any similar requirements that refer to § 401(a)(9) of the Internal Revenue Code<\/span> or the regulations. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> An exercise of the decanting power<\/span> is subject to the following limitations: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> If a first trust<\/span> contains property that qualified, or would have qualified but for provisions of this article other than this section, for a marital deduction for purposes of the gift or estate tax under the Internal Revenue Code<\/span> or a state<\/span> gift, estate, or inheritance tax, the second-trust instrument<\/span><\/span> must not include or omit any term that, if included in or omitted from the trust instrument<\/span> for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code<\/span> or state<\/span> law<\/span> under which the transfer qualified. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> If the first trust<\/span> contains property that qualified, or would have qualified but for provisions of this article other than this section, for a charitable deduction for purposes of the income, gift, or estate tax under the Internal Revenue Code<\/span> or a state<\/span> income, gift, estate, or inheritance tax, the second-trust instrument<\/span><\/span> must not include or omit any term that, if included in or omitted from the trust instrument<\/span> for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code<\/span> or state<\/span> law<\/span> under which the transfer qualified. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> If the first trust<\/span> contains property that qualified, or would have qualified but for provisions of this article other than this section, for the exclusion from the gift tax described in § 2503(b) of the Internal Revenue Code<\/span>, the second-trust instrument<\/span><\/span> must not include or omit a term that, if included in or omitted from the trust instrument<\/span> for the trust to which the property was transferred, would have prevented the transfer from qualifying under § 2503(b) of the Internal Revenue Code<\/span>. If the first trust<\/span> contains property that qualified, or would have qualified but for provisions of this article other than this section, for the exclusion from the gift tax described in § 2503(b) of the Internal Revenue Code<\/span> by application of § 2503(c) of the Internal Revenue Code<\/span>, the second-trust instrument<\/span><\/span> must not include or omit a term that, if included or omitted from the trust instrument<\/span> for the trust to which the property was transferred, would have prevented the transfer from qualifying under § 2503(c) of the Internal Revenue Code<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> If the property of the first trust<\/span> includes shares of stock in an S corporation, as defined in § 1361 of the Internal Revenue Code<\/span>, and the first trust<\/span> is, or but for provisions of this article other than this section would be, a permitted shareholder under any provision of § 1361 of the Internal Revenue Code<\/span>, an authorized fiduciary<\/span> may exercise the power with respect to part or all of the S-corporation stock only if any second trust<\/span> receiving the stock is a permitted shareholder under § 1361(c)(2) of the Internal Revenue Code<\/span>. If the property of the first trust<\/span> includes shares of stock in an S corporation and the first trust<\/span> is, or but for provisions of this article other than this section would be, a qualified subchapter-S trust within the meaning of § 1361(d) of the Internal Revenue Code<\/span>, the second-trust instrument<\/span><\/span> must not include or omit a term that prevents the second trust<\/span> from qualifying as a qualified subchapter-S trust. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> If the first trust<\/span> contains property that qualified, or would have qualified but for provisions of this article other than this section, for a zero inclusion ratio for purposes of the generation-skipping transfer tax under § 2642(c) of the Internal Revenue Code<\/span> the second-trust instrument<\/span><\/span> must not include or omit a term that, if included in or omitted from the first-trust instrument<\/span><\/span>, would have prevented the transfer to the first trust<\/span> from qualifying for a zero inclusion ratio under § 2642(c) of the Internal Revenue Code<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> If the first trust<\/span> is directly or indirectly the beneficiary<\/span> of qualified benefits property<\/span>, the second-trust instrument<\/span><\/span> may not include or omit any term that, if included in or omitted from the first-trust instrument<\/span><\/span>, would have increased the minimum distributions required with respect to the qualified benefits property<\/span> under § 401(a)(9) of the Internal Revenue Code<\/span> and any applicable regulations, or any similar requirements that refer to § 401(a)(9) of the Internal Revenue Code<\/span> or the regulations. If an attempted exercise of the decanting power<\/span> violates the preceding sentence, the trustee<\/span> is deemed to have held the qualified benefits property<\/span> and any reinvested distributions of the property as a separate share from the date of the exercise of the power, and § 64.2-779.19<\/a> applies to the separate share. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

7.<\/span> If the first trust<\/span> qualifies as a grantor trust<\/span> because of the application of § 672(f)(2)(A) of the Internal Revenue Code<\/span>, the second trust<\/span> may not include or omit a term that, if included in or omitted from the first-trust instrument<\/span><\/span>, would have prevented the first trust<\/span> from qualifying under § 672(f)(2)(A) of the Internal Revenue Code<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

8.<\/span> In this subdivision, “tax benefit<\/span>” means a federal or state<\/span> tax deduction, exemption, exclusion, or other benefit not otherwise listed in this section, except for a benefit arising from being a grantor trust<\/span>. Subject to subdivision 9, a second-trust instrument<\/span><\/span> may not include or omit a term that, if included in or omitted from the first-trust instrument<\/span><\/span>, would have prevented qualification for a tax benefit<\/span> if:\n\t\t\t\ta. The first-trust instrument<\/span><\/span> expressly indicates an intent<\/span> to qualify for the benefit or the first-trust instrument<\/span><\/span> clearly is designed to enable the first trust<\/span> to qualify for the benefit; and\n\t\t\t\tb. The transfer of property held by the first trust<\/span> or the first trust<\/span> qualified, or would have qualified but for provisions of this article other than this section, would have qualified for the tax benefit<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

9.<\/span> Subject to subdivision 4:\n\t\t\t\ta. Except as otherwise provided in subdivision 7, the second trust<\/span> may be a nongrantor trust<\/span>, even if the first trust<\/span> is a grantor trust<\/span>; and\n\t\t\t\tb. Except as otherwise provided in subdivision 10, the second trust<\/span> may be a grantor trust<\/span>, even if the first trust<\/span> is a nongrantor trust<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

10.<\/span> An authorized fiduciary<\/span> may not exercise the decanting power<\/span> if a settlor objects<\/span> in a signed record<\/span> delivered to the fiduciary within the notice period and:\n\t\t\t\ta. The first trust<\/span> and a second trust<\/span> are both grantor trusts<\/span>, in whole or in part, the first-trust instrument<\/span><\/span> grants the settlor or another person<\/span> the power to cause the first trust<\/span> to cease to be a grantor trust<\/span>, and the second-trust instrument<\/span><\/span> does not grant an equivalent power to the settlor or other person<\/span>; or\n\t\t\t\tb. The first trust<\/span> is a nongrantor trust<\/span> and a second trust<\/span> is a grantor trust<\/span>, in whole or in part, with respect to the settlor, unless: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The settlor has the power at all times to cause the second trust<\/span> to cease to be a grantor trust<\/span>; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The first-trust instrument<\/span><\/span> contains a provision granting the settlor or another person<\/span> a power that would cause the first trust<\/span> to cease to be a grantor trust<\/span> and the second-trust instrument<\/span><\/span> contains the same provision. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> If an authorized fiduciary<\/span> that has limited distributive discretion over the income or principal of a first trust<\/span> reasonably determines that the overall income, estate, gift, and generation-skipping tax consequences of the first trust<\/span> may be reduced by either (i) granting a general power of appointment<\/span><\/span> to a beneficiary<\/span> of the first trust<\/span> or (ii) eliminating a general power of appointment<\/span><\/span> granted to a beneficiary<\/span> of the first trust<\/span>, the fiduciary may exercise the decanting power<\/span> over all or any portion of the principal of the trust to grant or eliminate such a general power of appointment<\/span><\/span> and shall, in addition, have the powers found in subsection D of \u00a7 64.2-779.8<\/a> as if the fiduciary had expanded distributive discretion<\/span>, subject to the following provisions: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> In the case of the grant of a general power of appointment<\/span><\/span>, the class of permissible appointees contained in the second trust<\/span> shall be limited to the creditors<\/span> of the powerholder<\/span> or the creditors<\/span> of the powerholder<\/span>’s estate. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> In the case of the elimination of a general power of appointment<\/span><\/span>, the class of permissible appointees in the second trust<\/span> shall exclude the powerholder<\/span>, the powerholder<\/span>’s creditors<\/span>, the powerholder<\/span>’s estate, and the creditors<\/span> of the powerholder<\/span>’s estate, but shall otherwise be identical to the class of appointees permitted in the first trust<\/span>. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nTAX-RELATED PROVISIONS (\u00a7 64.2-779.16)\n\nA. As used in this section:\n\t\t\t“Grantor trust” means a trust as to which a settlor of a first\ntrust is considered the owner under §§ 671 through 677 of the Internal\nRevenue Code or § 679 of the Internal Revenue Code.\n\t\t\t“Internal Revenue Code” means the United States Internal Revenue\nCode of 1986.\n\t\t\t“Nongrantor trust” means a trust that is not a grantor trust.\n\t\t\t“Qualified benefits property” means property subject to the\nminimum distribution requirements of § 401(a)(9) of the Internal Revenue\nCode and any applicable regulations, or to any similar requirements that refer\nto § 401(a)(9) of the Internal Revenue Code or the regulations.\n\nB. An exercise of the decanting power is subject to the following limitations:\n\n 1. If a first trust contains property that qualified, or would have qualified\n but for provisions of this article other than this section, for a marital\n deduction for purposes of the gift or estate tax under the Internal Revenue\n Code or a state gift, estate, or inheritance tax, the second-trust instrument\n must not include or omit any term that, if included in or omitted from the\n trust instrument for the trust to which the property was transferred, would\n have prevented the transfer from qualifying for the deduction, or would have\n reduced the amount of the deduction, under the same provisions of the Internal\n Revenue Code or state law under which the transfer qualified.\n\n 2. If the first trust contains property that qualified, or would have\n qualified but for provisions of this article other than this section, for a\n charitable deduction for purposes of the income, gift, or estate tax under the\n Internal Revenue Code or a state income, gift, estate, or inheritance tax, the\n second-trust instrument must not include or omit any term that, if included in\n or omitted from the trust instrument for the trust to which the property was\n transferred, would have prevented the transfer from qualifying for the\n deduction, or would have reduced the amount of the deduction, under the same\n provisions of the Internal Revenue Code or state law under which the transfer\n qualified.\n\n 3. If the first trust contains property that qualified, or would have\n qualified but for provisions of this article other than this section, for the\n exclusion from the gift tax described in § 2503(b) of the Internal\n Revenue Code, the second-trust instrument must not include or omit a term\n that, if included in or omitted from the trust instrument for the trust to\n which the property was transferred, would have prevented the transfer from\n qualifying under § 2503(b) of the Internal Revenue Code. If the first\n trust contains property that qualified, or would have qualified but for\n provisions of this article other than this section, for the exclusion from the\n gift tax described in § 2503(b) of the Internal Revenue Code by\n application of § 2503(c) of the Internal Revenue Code, the second-trust\n instrument must not include or omit a term that, if included or omitted from\n the trust instrument for the trust to which the property was transferred,\n would have prevented the transfer from qualifying under § 2503(c) of the\n Internal Revenue Code.\n\n 4. If the property of the first trust includes shares of stock in an S\n corporation, as defined in § 1361 of the Internal Revenue Code, and the\n first trust is, or but for provisions of this article other than this section\n would be, a permitted shareholder under any provision of § 1361 of the\n Internal Revenue Code, an authorized fiduciary may exercise the power with\n respect to part or all of the S-corporation stock only if any second trust\n receiving the stock is a permitted shareholder under § 1361(c)(2) of the\n Internal Revenue Code. If the property of the first trust includes shares of\n stock in an S corporation and the first trust is, or but for provisions of\n this article other than this section would be, a qualified subchapter-S trust\n within the meaning of § 1361(d) of the Internal Revenue Code, the\n second-trust instrument must not include or omit a term that prevents the\n second trust from qualifying as a qualified subchapter-S trust.\n\n 5. If the first trust contains property that qualified, or would have\n qualified but for provisions of this article other than this section, for a\n zero inclusion ratio for purposes of the generation-skipping transfer tax\n under § 2642(c) of the Internal Revenue Code the second-trust instrument\n must not include or omit a term that, if included in or omitted from the\n first-trust instrument, would have prevented the transfer to the first trust\n from qualifying for a zero inclusion ratio under § 2642(c) of the\n Internal Revenue Code.\n\n 6. If the first trust is directly or indirectly the beneficiary of qualified\n benefits property, the second-trust instrument may not include or omit any\n term that, if included in or omitted from the first-trust instrument, would\n have increased the minimum distributions required with respect to the\n qualified benefits property under § 401(a)(9) of the Internal Revenue\n Code and any applicable regulations, or any similar requirements that refer to\n § 401(a)(9) of the Internal Revenue Code or the regulations. If an\n attempted exercise of the decanting power violates the preceding sentence, the\n trustee is deemed to have held the qualified benefits property and any\n reinvested distributions of the property as a separate share from the date of\n the exercise of the power, and § 64.2-779.19 applies to the separate\n share.\n\n 7. If the first trust qualifies as a grantor trust because of the application\n of § 672(f)(2)(A) of the Internal Revenue Code, the second trust may not\n include or omit a term that, if included in or omitted from the first-trust\n instrument, would have prevented the first trust from qualifying under §\n 672(f)(2)(A) of the Internal Revenue Code.\n\n 8. In this subdivision, “tax benefit” means a federal or state tax\n deduction, exemption, exclusion, or other benefit not otherwise listed in this\n section, except for a benefit arising from being a grantor trust. Subject to\n subdivision 9, a second-trust instrument may not include or omit a term that,\n if included in or omitted from the first-trust instrument, would have\n prevented qualification for a tax benefit if:\n \t\t\t\ta. The first-trust instrument expressly indicates an intent to qualify for\n the benefit or the first-trust instrument clearly is designed to enable the\n first trust to qualify for the benefit; and\n \t\t\t\tb. The transfer of property held by the first trust or the first trust\n qualified, or would have qualified but for provisions of this article other\n than this section, would have qualified for the tax benefit.\n\n 9. Subject to subdivision 4:\n \t\t\t\ta. Except as otherwise provided in subdivision 7, the second trust may be\n a nongrantor trust, even if the first trust is a grantor trust; and\n \t\t\t\tb. Except as otherwise provided in subdivision 10, the second trust may be\n a grantor trust, even if the first trust is a nongrantor trust.\n\n 10. An authorized fiduciary may not exercise the decanting power if a settlor\n objects in a signed record delivered to the fiduciary within the notice period\n and:\n \t\t\t\ta. The first trust and a second trust are both grantor trusts, in whole or\n in part, the first-trust instrument grants the settlor or another person the\n power to cause the first trust to cease to be a grantor trust, and the\n second-trust instrument does not grant an equivalent power to the settlor or\n other person; or\n \t\t\t\tb. The first trust is a nongrantor trust and a second trust is a grantor\n trust, in whole or in part, with respect to the settlor, unless:\n\n 1. The settlor has the power at all times to cause the second trust to cease\n to be a grantor trust; or\n\n 2. The first-trust instrument contains a provision granting the settlor or\n another person a power that would cause the first trust to cease to be a\n grantor trust and the second-trust instrument contains the same provision.\n\nC. If an authorized fiduciary that has limited distributive discretion over the\nincome or principal of a first trust reasonably determines that the overall\nincome, estate, gift, and generation-skipping tax consequences of the first\ntrust may be reduced by either (i) granting a general power of appointment to a\nbeneficiary of the first trust or (ii) eliminating a general power of\nappointment granted to a beneficiary of the first trust, the fiduciary may\nexercise the decanting power over all or any portion of the principal of the\ntrust to grant or eliminate such a general power of appointment and shall, in\naddition, have the powers found in subsection D of \u00a7 64.2-779.8 as if the\nfiduciary had expanded distributive discretion, subject to the following\nprovisions:\n\n 1. In the case of the grant of a general power of appointment, the class of\n permissible appointees contained in the second trust shall be limited to the\n creditors of the powerholder or the creditors of the powerholder’s\n estate.\n\n 2. In the case of the elimination of a general power of appointment, the class\n of permissible appointees in the second trust shall exclude the powerholder,\n the powerholder’s creditors, the powerholder’s estate, and the\n creditors of the powerholder’s estate, but shall otherwise be identical\n to the class of appointees permitted in the first trust.\n\nHISTORY: 2017, c. 592.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}