UTC 814. Discretionary powers
- • tax savings
- • inclusion of capital gains in income
(1) A trustee shall exercise a discretionary power in good faith and in a manner that is in accordance with the terms and purposes of the trust and the interests of the beneficiaries. The duty imposed by this subsection is not affected by the grant of discretion in the terms of the trust, even though the terms of the trust provide that the trustee has absolute, sole or uncontrolled discretion or use other words purporting to convey broad discretion.
(2) Subject to subsection (4) of this section, and unless the terms of the trust expressly provide otherwise:
(a) A person other than a settlor who is a beneficiary and trustee of a trust that confers on the trustee a power to make discretionary distributions to or for the trustee’s personal benefit may exercise the power only in accordance with an ascertainable standard; and
(b) A trustee may not exercise a power to make discretionary distributions to satisfy a legal obligation of support that the trustee personally owes another person.
(3) A power the exercise of which is limited or prohibited by subsection (2) of this section may be exercised by a majority of the remaining trustees whose exercise of the power is not so limited or prohibited. If the power of all trustees is so limited or prohibited, the court may appoint a special fiduciary with authority to exercise the power.
(4) Subsection (2) of this section does not apply to:
(a) A power held by the settlor’s spouse who is the trustee of a trust for which a marital deduction, as described in section 2056(b)(5) or 2523(e) of the Internal Revenue Code, as in effect on January 1, 2006, was previously allowed;
(b) Any trust during any period that the trust may be revoked or amended by its settlor; or
(c) A trust if contributions to the trust qualify for the annual exclusion under section 2503(c) of the Internal Revenue Code, as in effect on January 1, 2006.
(5) Unless otherwise provided by the trust, a trustee may include capital gains from the sale or exchange of capital assets in distributable net income to the extent that the gains are, in a reasonable and impartial exercise of discretion by the trustee:
(a) Allocated to income pursuant to the trustee’s power to adjust between principal and income under ORS 129.215 (UPIA 104. Trustee’s power to adjust);
(b) Allocated to principal and treated consistently by the trustee on the trust’s books, records and tax returns as part of a distribution to a beneficiary; or
(c) Allocated to principal but actually distributed to a beneficiary or utilized by the trustee in determining the amount that is distributed or required to be distributed to a beneficiary. [2005 c.348 §73; 2015 c.126 §3]
Note: See note under 130.230 (UTC 417. Combination and division of trusts).
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.