2006 Ohio Revised Code - 1340.22. Effective until 1-1-07.

§ 1340.22. Fiduciary cannot exercise power to make certain discretionary distributions; special fiduciary.
 

(A)  Unless the governing instrument conferring the powers specifically refers to this section and states that this section does not apply and except as provided in divisions (B), (C), and (D) of this section, any of the following powers conferred upon a fiduciary by the governing instrument cannot be exercised by the fiduciary: 

(1) The power to make any discretionary distribution of either principal or income to or for the benefit of the fiduciary in the fiduciary's individual capacity; 

(2) The power to make any discretionary distribution of either principal or income to satisfy any of the fiduciary's legal obligations in the fiduciary's individual capacity for support or other purposes; 

(3) The power to make any discretionary distribution of either principal or income to or for the benefit of one or more beneficiaries to the extent that the fiduciary would or could receive a similar distribution in the fiduciary's individual capacity under any governing instrument from the beneficiary or beneficiaries acting as a fiduciary; 

(4) The power to make any discretionary distribution of either principal or income to or for the benefit of one or more beneficiaries who possess both the right to remove the fiduciary and the right to appoint a successor fiduciary that may include but is not limited to the beneficiary, any of the beneficiaries, or any related or subordinate person, within the meaning of section 672(c) of the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C. 672(c), with respect to the beneficiary or any of the beneficiaries, if the successor fiduciary has been appointed by the exercise of both of those rights by the beneficiary or beneficiaries. 

(B) (1)  If division (A)(1), (3), or (4) of this section prohibits a fiduciary from exercising any power conferred by the governing instrument, the fiduciary, notwithstanding division (A)(1), (3), or (4) of this section, may exercise the power to the extent set forth in the governing instrument, provided that the exercise of that power, in all events, shall be limited to an ascertainable standard. 

(2) Any power conferred upon a fiduciary that permits the fiduciary to make discretionary distributions of either principal or income and that is expressed in terms of a beneficiary's health, education, support, comfort, care, comfort and support, support in reasonable comfort, support in accustomed manner of living, maintenance, maintenance in health and reasonable comfort, or any combination of those factors, is a power conferred upon the fiduciary, the exercise of which is reasonably measurable in terms of, and limited by, an ascertainable standard related to the health, education, support, and maintenance of the beneficiary. 

(C)  Any fiduciary who is authorized to exercise one or more powers set forth in a governing instrument may exercise any of those powers that the fiduciary is not prohibited from exercising because of the operation of division (A) of this section even though one or more other fiduciaries under the governing instrument is prohibited from exercising the power because of the operation of division (A) of this section. 

(D)  Any power conferred upon a fiduciary that the fiduciary cannot exercise because of the operation of division (A) of this section may be exercised by a special fiduciary appointed by a court of competent jurisdiction. Upon the application of any party in interest, the appropriate probate court or general division of the appropriate court of common pleas may appoint a special fiduciary. Upon the appointment of a special fiduciary under this division, the special fiduciary is qualified to exercise any power set forth in the governing instrument during the period of time that the court designates. 

(E)  This section does not apply to any of the following: 

(1) Any purely discretionary power to distribute either principal or income to or for the benefit of a beneficiary, other than a beneficiary who is also a fiduciary, that is exercisable in a fiduciary capacity in the sole and absolute discretion of the fiduciary and without any other direction or limitation as to its exercise or use set forth in the governing instrument; 

(2) Any power of appointment or withdrawal that specifically is granted in the governing instrument to a beneficiary and that is exercisable in an individual capacity but not in a fiduciary capacity; 

(3) Any trust during the time that the trust is revocable or amendable by its settlor; 

(4) Any power held by a decedent's or settlor's spouse who is the trustee under a decedent's trust for which a marital deduction for estate tax purposes has been allowed, except a trust or portion of a trust regarding which a special election for qualified terminable interest property has been made as provided in section 2652(a)(3) of the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C. 2652(a)(3); 

(5) (a) Subject to divisions (E)(5)(b) and (c) of this section, any irrevocable trust created under a governing instrument executed before the expiration of three years after the effective date of this amendment, if all of the parties in interest elect affirmatively not to be subject to the application of this section through a written instrument delivered to the fiduciary. 

(b) In the case of a testamentary trust, the election described in division (E)(5)(a) of this section shall be filed with the probate court in which the will was admitted to probate. 

(c) All of the parties in interest shall make the election described in division (E)(5)(a) of this section on or before the later of the expiration of three years after the effective date of this amendment or three years after the date on which the trust becomes irrevocable. 

(d) As used in division (E)(5) of this section, "party in interest" does not include a contingent remainder beneficiary and means any of the following: 

(i) Each fiduciary then serving; 

(ii) Each current beneficiary then in existence or, if that beneficiary has not attained the age of majority or otherwise is incapacitated, the beneficiary's legal representative under applicable law or the attorney in fact of the current beneficiary under a durable power of attorney that is sufficient to grant the authority under division (E)(5) of this section; 

(iii) Each remainder beneficiary then in existence or, if that remainder beneficiary has not attained the age of majority or otherwise is incapacitated, the remainder beneficiary's legal representative under applicable law or the attorney in fact of the remainder beneficiary under a durable power of attorney that is sufficient to grant the authority under division (E)(5) of this section. 
 

HISTORY: 144 v H 427 (Eff 10-8-92); 146 v S 158 (Eff 5-8-96); 149 v H 345. Eff 7-23-2002.
 

The effective date is set by section 6 of HB 345. 

See provisions § 6 of HB 427 (144 v  - ) following RC § 1340.21.