HB 399 Summary

• Allows trustees of a first trust to appoint income or principal to a second trust for the same beneficiaries, provided the trustee determines it necessary or desirable after considering both trusts' terms and purposes.

• Restricts trustee authority to appoint to a second trust when the trustee is a beneficiary of the first trust or when beneficiaries can remove the trustee with a related or subordinate party, unless the discretionary power is limited by an ascertainable standard.

• Prohibits appointments that would increase distributions to the trustee or beneficiaries who can remove the trustee, or remove restrictions on discretionary distributions from the original trust.

• Clarifies that settlor creditors may reach beneficial interests in irrevocable trusts with spendthrift provisions only in cases of fraudulent conveyance or when the settlor retained certain rights at the time the trust became irrevocable, including sole beneficiary status or amendability powers.

• Protects trust property from creditors holding special powers of appointment or testamentary general powers of appointment, preventing attachment, forced sale, or compulsion to exercise such powers.