SENATE BILL NO. 94
AN ACT TO AMEND TITLES 5 AND 12 OF THE DELAWARE CODE RELATING TO TRUSTS AND LIMITED PURPOSE TRUST COMPANIES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Title 12, of the Delaware Code, by adding a new section 3548 to read as follows:
"§3548. Limited Purpose Trust Companies, General Powers of Appointment.
(1) Any power conferred upon a limited purpose trust company formed under Chapter 7 of Title 5 of the Delaware Code, in its capacity as a fiduciary, which would, except for this section, constitute in whole or in part, a general power of appointment if such power were held by any officer, director or shareholder of the limited purpose trust company, may only be exercised in the manner provided in subsection (2) of this section.
(2) A power described in subsection (1) of this section may, to the extent permissible under such power, be exercised as follows:
(a) The limited purpose trust company may exercise the power in favor of a person other than any officer, director or share-holder of the limited purpose trust company.
(b) The limited purpose trust company may only exercise the power in favor of, or for the benefit of (including in discharge of a support obligation), an officer, director or shareholder of the limited purpose trust company to provide for that person's health, education, support or maintenance as described under Internal Revenue Code sections 2041 and 2514.
(c) If the power described in subsection (1) of this section is conferred upon two or more fiduciaries, it may be exercised by the fiduciary or fiduciaries who are not disqualified from exercising the power as if such fiduciary or fiduciaries were the only fiduciary or fiduciaries.
(d) If all of the serving fiduciaries are disqualified from exercising a power, the court that would have jurisdiction to appoint a fiduciary under the instrument if there were no fiduciary currently serving, may appoint a special fiduciary whose only power is to exercise the power that cannot be exercised by the other fiduciaries by reason of subsection (1) of this section.
(e) Subsection (1) of this section shall not apply to any power to the extent that it is exercisable in favor of (i) the settlor of a trust that is revocable or amendable by the settlor; or (ii) a decedent's or settlor's spouse who is a beneficiary of a trust for which a marital deduction has been allowed; or (iii) the settlor of a trust holding property that is the subject of a qualified disposition within the meaning of Section 3570 (6) of Chapter 35 of this Title unless the settlor has retained a special ;power of appointment described in Section 3570(10)b.2. of Chapter 35 of this Title.
(3) Any power conferred upon a limited purpose trust company in its capacity as a fiduciary to allocate receipts and expenses as between income and principal in favor of an officer, director or shareholder of the limited purpose trust company must be exercised in accordance with the provisions of Chapter 61 of this Title.
(4) 'General power of appointment' means any power that would cause income to be taxed to a taxpayer in his or her individual capacity under Section 678 of the Internal Revenue Code, and any power that would be a general power of appointment, in whole or in part, under section 2041(b)(1) or 2514(c) of the Internal Revenue Code.
(5) 'Internal Revenue Code' means the Internal Revenue Code of 1986, as amended.
(6) 'Fiduciary' has the meaning set forth in section 3301 of Title 12 of the Delaware Code.
(7) This section applies to all fiduciary relationships in existence on the date of enactment of this legislation and to all other fiduciary relationships that come into existence after that date. The provisions of this section are declaratory of existing law, and neither modify nor amend existing fiduciary relationships."
Section 2. Amend Title 5, Delaware Code, by adding a new subsection 775(b)(4) to read as follows:
"(4) Exercise any power of appointment in a manner inconsistent with section 3548 of Title 12 of the Delaware Code."
Approved May 14, 2001