§ 19-3E-4 — Permitted Trust Powers of Transferor

(a) A transferor has only the powers and rights that are conferred by the trust instrument. Except as otherwise provided in this chapter, a transferor does not have any power or right with respect to property that is the subject of a qualified disposition or income from the property and any agreement or understanding that purports to grant or permit the retention of any greater powers or rights is void.
(b) A trust instrument may provide for one or more of the following rights, powers, or interests of a transferor:
(1) The power to direct the investment decisions of the trust.
(2) The power to veto a distribution from the trust.
(3) A special power of appointment exercisable by will or other written instrument of the transferor effective only on the death of the transferor.
(4) The right to the potential or actual receipt of income, including rights to income retained in the trust instrument.
(5) The right to the potential or actual receipt of income or principal from a charitable remainder unitrust or charitable remainder annuity trust, as those terms are defined in 26 U.S.C § 664; and the right, at any time by written instrument delivered to the trustee, to release the transferor’s interest in the trust, in whole or in part, in favor of a charitable organization that has a succeeding beneficial interest in the trust.
(6) The right to the potential or actual receipt of income or principal from a grantor-retained annuity trust or grantor-retained unitrust as those terms are described in 26 U.S.C. § 2702, or the receipt each year of a percentage of the value of the trust property, as provided in the trust instrument. The amount may be described either as a percentage, a fixed amount, or an amount determined from time to time under the governing instrument and may not exceed five percent of the value of the trust.
(7) The potential or actual receipt or use of principal if the potential or actual receipt or use of principal would be the result of a trustee acting under any of the following:
a. A discretionary trust provision.
b. A support provision.
c. The direction of an advisor acting under a discretionary trust provision or support provision.
(8) The right to remove a trustee or advisor and to appoint a new trustee or advisor.
(9) The right to the potential or actual use of real property held under a qualified personal residence trust within the meaning of that term as described in 26 U.S.C. § 2702(c), or the possession and enjoyment of a qualified annuity interest within the meaning of that term as described in 26 C.F.R. § 25.2702-5(c)(8).
(10) The right to the potential or actual receipt of income or principal to pay, in whole or in part, income taxes due on income of the trust if the potential or actual receipt of income or principal is under a provision in the trust instrument that expressly provides for the payment of those taxes and if the potential or actual receipt of income or principal would be the result of a qualified trustee acting in either of the following ways:
a. In the trustee’s discretion or under a mandatory direction in the trust instrument.
b. At the direction of an advisor who is acting in the advisor’s discretion.
(11) A trust instrument may authorize a qualified trustee, after the death of the transferor, to pay the transferor’s debts, the expenses of administering the transferor’s estate, and any estate or inheritance tax imposed on or with respect to the transferor’s estate, without regard to the source of the payment.
(12) The right to the actual or potential receipt of a minimum required distribution, as defined in 26 U.S.C. § 4974(b), with respect to a retirement benefit.
(c) None of the powers described in subsection (b), alone or in any combination, shall be deemed a power to revoke.

Legislative History

(Act 2021-238, §4.)