                                 CODE OF VIRGINIA

DECANTING POWER UNDER LIMITED DISTRIBUTIVE DISCRETION (§ 64.2-779.9)

A. As used in this section, &#8220;limited distributive discretion&#8221; means
a discretionary power of distribution that is limited to an ascertainable
standard or a reasonably definite standard.

B. An authorized fiduciary that has limited distributive discretion over the
income or principal of the first trust for benefit of one or more current
beneficiaries may exercise the decanting power over the income or principal of
the first trust.

C. Under this section and subject to &#xA7; 64.2-779.11, a second trust may be
created or administered under the law of any jurisdiction. Under this section,
the second trusts, in the aggregate, must grant each beneficiary of the first
trust beneficial interests that are substantially similar to the beneficial
interests of the beneficiary in the first trust. A second trust that defers or
postpones a contingent right of a beneficiary to receive an outright
distribution of assets upon the attainment of a certain age or upon the
occurrence of a specific event (a &#8220;deferred distribution&#8221;) shall be
substantially similar to the first trust if the second trust provides that (i)
during the lifetime of the beneficiary, no portion of the income or principal
attributable to the deferred distribution may be distributed to, or for the
benefit of, any person other than the beneficiary and (ii) the beneficiary shall
have a testamentary general power of appointment exercisable in favor of the
beneficiary&#8217;s estate over the deferred distribution or the deferred
distribution shall be payable to the beneficiary&#8217;s estate if the second
trust does not terminate during the beneficiary&#8217;s lifetime.

D. A power to make a distribution under a second trust for the benefit of a
beneficiary who is an individual is substantially similar to a power under the
first trust to make a distribution directly to the beneficiary. A distribution
is for the benefit of a beneficiary if:

   1. The distribution is applied for the benefit of the beneficiary;

   2. The beneficiary is under a legal disability or the trustee reasonably
   believes the beneficiary is incapacitated, and the distribution is made as
   permitted under this chapter; or

   3. The distribution is made as permitted under the terms of the first-trust
   instrument and the second-trust instrument for the benefit of the beneficiary.

E. If an authorized fiduciary has limited distributive discretion over part but
not all of the income or principal of a first trust, the fiduciary may exercise
the decanting power under this section over that part of the income or principal
over which the authorized fiduciary has limited distributive discretion.

HISTORY: 2017, c. 592.