1. Discretionary power; interests of beneficiaries. Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as "absolute," "sole" or "uncontrolled," the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries. A trustee's power to make distributions is discretionary notwithstanding terms of the trust providing that the trustee "shall" make distributions exercising a discretionary power, with or without standards.

Sec. 18. 18-B MRSA §814, sub-§2, ķA, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:

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 relating to the trustee's individual health, education, support or maintenance within the meaning of the federal Internal Revenue Code of 1986, Section 2041(b)(1)(A) or 2514(c)(1), as in effect on July 1, 2005, or as later amended; and

MAINE COMMENT

Adoption of section 814, subsection 1 is not intended to impose any new or additional requirements of "good faith" upon a trustee's exercise of a discretionary power, or to change existing Maine law regarding the standards applicable to the exercise or non-exercise of a trustee's discretion. As noted in the Maine Comment to section 504, the distinction at common law between discretionary and support trusts is not abolished by enactment of this Code.

Emergency clause. In view of the emergency cited in the preamble, this Act takes effect July 1, 2005.

SUMMARY

The amendment of the Maine Revised Statutes, Title 18-A, section 5-508, subsection (g) preserves the effectiveness of powers of durable powers of attorney executed prior to July 1, 2005.