2006 Georgia Code - 53-12-265

53-12-265. (a) Due to the inherent conflict of interest that exists between a trustee who is a beneficiary and other beneficiaries of the trust, unless the terms of a trust refer specifically to this Code section and provide expressly to the contrary, a trustee shall not exercise any of the following powers conferred upon such trustee in his or her capacity as trustee (provided that these restrictions shall not apply to a trustee who is the settlor of a trust that is revocable or amendable by such settlor at the time the power is exercised or to a decedent´s or settlor´s spouse who is the trustee of a testamentary or an inter vivos trust designed to qualify for the federal estate or gift tax marital deduction under the Internal Revenue Code or any subsequent statute of similar import): (1) The power to make discretionary distributions of either principal or income to or for the benefit of such trustee, except to provide for such trustee´s health, education, maintenance, or support as described under Sections 2041 and 2514 of the Internal Revenue Code or any subsequent statute of similar import; (2) The power to make discretionary allocations of receipts or expenses as between principal and income, unless such trustee acts in a fiduciary capacity whereby such trustee has no power to enlarge or shift any beneficial interest except as an incidental consequence of the discharge of such trustee´s fiduciary duties; (3) The power to make discretionary distributions of either principal or income to satisfy any legal support obligation of such trustee; or (4) Any other power, including the right to remove or to replace any trustee, so as to cause any of the powers enumerated in paragraphs (1), (2), and (3) of this subsection to be exercised on behalf of, or for the benefit of, such trustee. Any of the foregoing proscribed powers that is conferred upon two or more trustees may be exercised by the trustee or trustees other than the restricted trustee, as defined in subsection (d) of this Code section. If there is no trustee who is not a restricted trustee, any party in interest, as defined in subsection (c) of this Code section, may apply to a court of competent jurisdiction to appoint a cotrustee who is an independent trustee, as defined in subsection (d) of this Code section, with respect to the restricted trustee, for the purpose of exercising such power, and such power may be exercised by the independent trustee appointed by the court. (b) This Code section applies to: (1) Any trust created under a governing instrument (will or trust) executed after June 30, 2002; (2) Any trust created under a governing instrument (will or trust) executed before July 1, 2002, unless: (A) At any time while the terms of the trust are revocable or amendable, the trust is revoked or amended to refer specifically to this Code section and expressly provide otherwise; or (B) After the trust becomes irrevocable and unamendable, all parties in interest, as defined in subsection (c) of this Code section, elect affirmatively, by written declaration executed in the manner prescribed for the recordation of deeds in this state and delivered to the trustee, not to be subject to the application of this Code section. Such election must be made on or before the later of July 1, 2005, or the date that is three years after the date on which the trust becomes irrevocable and unamendable. Prior to the effectiveness of any timely election by the parties in interest of a trust not to be subject to the provisions of this Code section, the provisions of this Code section, to the extent otherwise applicable, shall apply to such trust. However, the provisions of this Code section neither create a new cause of action nor impair any existing cause of action which, in either case, relates to any power proscribed by this Code section that was exercised before July 1, 2002. (c) For the purposes of subsection (a) or (b) of this Code section: (1) If the trust is revocable or amendable, the parties in interest are the person or persons holding the power of revocation or amendment; or (2) If the trust is not revocable or amendable, the parties in interest are all of the following: (A) Each trustee then serving; (B) Each income beneficiary, as defined in subsection (d) of this Code section, then in existence or, if any such income beneficiary has not attained majority or is otherwise incapacitated, the person or persons, if any, empowered under applicable law to act on behalf of such income beneficiary; and (C) Each remainder beneficiary, as defined in subsection (d) of this Code section, then in existence or, if any such remainder beneficiary has not attained majority or is otherwise incapacitated, the person or persons, if any, empowered under applicable law to act on behalf of such remainder beneficiary. (d) As used in this Code section, the term: (1) 'Income beneficiary' means any person to whom distribution of income is to any extent required or permitted at the time the provision using such term is applied. (2) 'Independent trustee' means, with respect to any restricted trustee, any person who would not be a related or subordinate party as to such restricted trustee, within the meaning of Section 672 of the Internal Revenue Code or any subsequent statute of similar import, determined as if such restricted trustee were the grantor of a trust. (3) 'Remainder beneficiary' means any person to whom any portion of a trust would be distributable if the trust were to terminate at the time the provision using such term is applied. (4) 'Restricted trustee' means any trustee whose exercise of any power is proscribed by this Code section.

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