§ 633a-4215

633A.4215 Distributions in further trust. 1. As used in this section:a. 'First trust' means a trust from which income or principal is transferred into the second trust. b. 'Restricted trustee' means a trustee of the first trust if such trustee is a beneficiary of the first trust or if such trustee has the power to change the trustees of the first trust withinthe meaning of subsection 5. c. 'Second trust' means a trust into which the income or principal of the first trust has been transferred. 2. Unless the terms of the governing instrument expressly provide otherwise, if a trustee of the first trust has discretion under the terms of a governing instrument to make adistribution of income or principal to or for the benefit of one or more beneficiaries of thefirst trust, whether or not restricted by any standard, then the trustee, independently or withcourt approval, may appoint part or all of the income or principal subject to the trustee’sdiscretion in favor of a trustee of a second trust under a governing instrument separatefrom the governing instrument of the first trust. Before exercising the trustee’s discretion toappoint and distribute assets to a second trust, the trustee of

ust under a governing instrument separatefrom the governing instrument of the first trust. Before exercising the trustee’s discretion toappoint and distribute assets to a second trust, the trustee of the first trust shall determinewhether the appointment is necessary or desirable after taking into account the purposesof the first trust, the terms and conditions of the second trust, and the consequences of thedistribution. In addition, the following apply to all appointments made under this section: a. The second trust may only have as beneficiaries one or more of the beneficiaries of the first trust to or for whom a discretionary distribution of income or principal may be madefrom the first trust, or to or for whom a distribution of income or principal may be made inthe future from the first trust at a time or upon the happening of an event specified under thefirst trust. b. No restricted trustee of the first trust may exercise such authority over the first trust to the extent that doing so could have any of the following effects: (1) Benefiting the restricted trustee as a beneficiary of the first trust, unless the exercise of such authority is limited by an ascertainable standard

ng so could have any of the following effects: (1) Benefiting the restricted trustee as a beneficiary of the first trust, unless the exercise of such authority is limited by an ascertainable standard based on or related to health, education,maintenance, or support. (2) Removing restrictions on discretionary distributions to a beneficiary imposed by the governing instrument under which the first trust was created, except that a provision in thesecond trust which limits distributions by an ascertainable standard based on or related tothe health, education, maintenance, or support of any such beneficiary is permitted, as is adistribution to a trust established pursuant to 42 U.S.C. §1396p(d)(4). c. No restricted trustee of the first trust may exercise such authority over the first trust to the extent that doing so would have the effect of increasing the distributions that can bemade from the second trust to the restricted trustees of the first trust or to a beneficiary whomay change the trustees of the first trust within the meaning of subsection 5 compared to thedistributions that can be made to such trustee or beneficiary, as the case may be, under thefirst trust, unless the

e the trustees of the first trust within the meaning of subsection 5 compared to thedistributions that can be made to such trustee or beneficiary, as the case may be, under thefirst trust, unless the exercise of such authority is limited by an ascertainable standard basedon or related to health, education, support, or maintenance within the meaning of section2041(b)(1)(A) or 2514(c)(1) of the Internal Revenue Code. d. The provisions of paragraphs 'b' and 'c' only apply to restrict the authority of a trustee if either a trustee, or a beneficiary who may change the trustee, is a United States citizenor domiciliary under the Internal Revenue Code, or the trust owns property that would besubject to United States estate or gift taxes if owned directly by such a person. e. In the case of any trust contributions which have been treated as gifts qualifying for the exclusion from gift tax described in section 2503(b) of the Internal Revenue Code, by reasonof the application of section 2503(c) of the Internal Revenue Code, the governing instrumentfor the second trust shall provide that the beneficiary’s remainder interest shall vest no laterthan the date upon which such interest would have

of the Internal Revenue Code, the governing instrumentfor the second trust shall provide that the beneficiary’s remainder interest shall vest no laterthan the date upon which such interest would have vested under the terms of the governinginstrument for the first trust. f. The exercise of such authority may not reduce any income interest of any income beneficiary of any of the following trusts: (1) A trust for which a marital deduction has been taken for federal tax purposes under Sat Dec 23 12:13:31 2023 Iowa Code 2024, Section 633A.4215 (4, 0) §633A.4215, IOWA TRUST CODE 2 section 2056 or 2523 of the Internal Revenue Code, or for state tax purposes under anycomparable provision of applicable state law. (2) A charitable remainder trust under section 664 of the Internal Revenue Code.(3) A grantor retained annuity or unitrust trust under section 2702 of the Internal Revenue Code. g. The exercise of such authority does not apply to trust property subject to a presently exercisable power of withdrawal held by a trust beneficiary to whom, or for the benefit ofwhom, the trustee has authority to make distributions, unless after the exercise of suchauthority, the beneficiary’s power of

r of withdrawal held by a trust beneficiary to whom, or for the benefit ofwhom, the trustee has authority to make distributions, unless after the exercise of suchauthority, the beneficiary’s power of withdrawal is unchanged with respect to the trustproperty. h. The exercise of such authority is not prohibited by a provision in the governing instrument that prohibits amendment or revocation of the trust. i. Any appointment made by a trustee shall be considered a distribution by the trustee pursuant to the trustee’s distribution powers and authority. j. Notwithstanding the foregoing provisions of this subsection, the governing instrument of the second trust may grant a power of appointment to one or more of the beneficiariesof the second trust who are beneficiaries of the first trust. The power of appointment mayinclude the power to appoint trust property to the holder of the power of appointment, theholder’s creditors, the holder’s estate, the creditors of the holder’s estate, or any other person,whether or not that person is a trust beneficiary. k. A permitted exercise of the trustee’s discretion over the entire income and principal of the first trust may be made by modifying the

ther person,whether or not that person is a trust beneficiary. k. A permitted exercise of the trustee’s discretion over the entire income and principal of the first trust may be made by modifying the first trust without an actual distribution ofproperty, in which case the second trust is the modified first trust. A modification in furthertrust pursuant to this paragraph shall require the trustee to notify all beneficiaries of the trust,in writing, at least twenty days prior to the effective date of such exercise, but shall not besubject to the limitations of part 2 of subchapter II of this chapter. l. This section applies to any trust administered under the laws of this state, including a trust whose governing jurisdiction is transferred to this state. 3. Any action that may not be taken by a trustee of the first trust by reason of the restrictions in subsection 2, paragraph 'b', may instead be taken by any other trustee ofthe first trust who is not so restricted, or, if none, by the next available party who can be asuccessor trustee and who is not so restricted. 4. The second trust may be a trust created or administered under the laws of any jurisdiction, within or without the

e next available party who can be asuccessor trustee and who is not so restricted. 4. The second trust may be a trust created or administered under the laws of any jurisdiction, within or without the United States. 5. For the purposes of subsections 1 and 2, a beneficiary shall be considered to have the power to change the trustees if the beneficiary can, alone or with others, name suchbeneficiary as a trustee or can remove a trustee and replace that trustee with a new trusteewho is the beneficiary or who is related or subordinate, as defined in section 672 of the InternalRevenue Code, to the beneficiary. 6. The exercise of the power to distribute the income or principal of the trust under this section shall be by an instrument in writing, signed and acknowledged by the trustee, andfiled with the records of the trust. The trustee of the first trust may notify the beneficiariesof the first trust, in writing, prior to the effective date of the trustee’s exercise of the powerunder this section. A copy of the exercise of this authority and the second trust agreementshall satisfy this notice provision.

ting, prior to the effective date of the trustee’s exercise of the powerunder this section. A copy of the exercise of this authority and the second trust agreementshall satisfy this notice provision. For the purposes of this section, the term 'beneficiaries'means those persons who would be entitled to notice and a copy of the first trust instrumentunder section 633A.4213. 7. The exercise of the power to distribute the income or principal of the trust under this section shall be considered the exercise of a power of appointment that shall not be exercisedin favor of the trustee, the trustee’s creditors, the trustee’s estate, or the creditors of thetrustee’s estate. 8. The power under this section may not be exercised to suspend the power to alienate Sat Dec 23 12:13:31 2023 Iowa Code 2024, Section 633A.4215 (4, 0) trust property or extend the first trust beyond the permissible period of any rule againstperpetuities applicable to the first trust. 2020 Acts, ch 1076, §6Referred to in §633A.4810Legislative intent and construction; 2020 Acts, ch 1076, §17 Sat Dec 23 12:13:31 2023 Iowa Code 2024, Section 633A.4215 (4, 0)