(a) As used in this Code section, the term:

(1) "Original trust" refers to the trust from which principal is being distributed.

(2) "Second trust" refers to the trust to which assets are being distributed from the original trust, whether a separate trust or an amended version of the original trust.

(b)

(1) As used in this subsection, the term "current beneficiary" means a person who, on the date of distribution to the second trust, is a distributee or permissible distributee of trust income or principal.

(2) Unless the original trust instrument expressly provides otherwise, a trustee, other than a person who contributed property to the trust, with authority to invade the principal of the original trust to make distributions to or for the benefit of one or more of the beneficiaries may also, independently or with court approval, exercise such authority by distributing all or part of the principal of the original trust to a trustee of a second trust; provided, however, that the second trust shall not include as a:

(A) Current beneficiary any person that is not a current beneficiary of income or principal of the original trust; or

(B) Beneficiary any person that is not a beneficiary of the original trust.

(c) Except as provided in this Code section, a trustee may exercise the power to invade the principal of the original trust under subsection (b) of this Code section without the consent of the settlor or the beneficiaries of the original trust if such trustee provides written notice of such trustee's decision to exercise the power to such settlor, if living, and those persons then entitled to annual reports from the trustee of the original trust. Such notice shall:

(1) Describe the manner in which such trustee intends to exercise such power;

(2) Specify the date such trustee proposes to distribute to the second trust; and

(3) Be delivered at least 60 days before the proposed distribution to the second trust.

(d) The exercise of the power to invade the principal of the original trust under subsection (b) of this Code section shall be by an instrument in writing, signed and acknowledged by the trustee, and filed with the records of the original trust.

(e) The exercise of the power to invade the principal of the original trust under subsection (b) of this Code section shall not extend the permissible period of the rule against perpetuities that applies to such original trust.

(f) This Code section shall not be construed to abridge the right of any trustee who has a power of invasion to distribute property in further trust that arises under any other law or under common law, and nothing in this Code section shall be construed to imply that the common law does not permit the exercise of a power to invade the principal of a trust in the manner authorized under subsection (b) of this Code section.

(g) A second trust may confer a power of appointment upon a beneficiary of the original trust to whom or for the benefit of whom the trustee has the power to distribute the principal of such original trust. For purposes of this subsection, the permissible appointees of the power of appointment conferred upon a beneficiary may include persons who are not beneficiaries of such original trust or second trust.

(h) If any contribution to the original trust qualified for the annual exclusion under Section 2503(b) of the federal Internal Revenue Code, as it existed on February 1, 2018, the marital deduction under Section 2056(a) or 2523(a) of the federal Internal Revenue Code, as it existed on February 1, 2018, or the charitable deduction under Section 170(a), 642(c), 2055(a), or 2522(a) of the federal Internal Revenue Code, as it existed on February 1, 2018, is a direct skip qualifying for treatment under Section 2642(c) of the federal Internal Revenue Code, as it existed on February 1, 2018, or qualified for any other specific tax benefit that would be lost by the existence of the authorized trustee's authority under subsection (b) of this Code section for income, gift, estate, or generation-skipping transfer tax purposes under the federal Internal Revenue Code, then the authorized trustee shall not have the power to distribute the principal of a trust pursuant to subsection (b) of this Code section in a manner that would prevent the contribution to the original trust from qualifying for such exclusion, deduction, or other tax benefit or would reduce such exclusion, deduction, or other tax benefit that was originally claimed with respect to such contribution.

(i) The exercise of the power to invade the principal of the original trust under subsection (b) of this Code section shall be subject to the following limitations:

(1) The second trust need not qualify as a grantor trust for federal income tax purposes, even if the original trust does qualify as a grantor trust, except that if such original trust qualifies as a grantor trust because of the application of Section 672(f)(2)(A) of the federal Internal Revenue Code, as it existed on February 1, 2018, such second trust may not include or omit a term that, if included in or omitted from the original trust instrument, would have prevented such original trust from qualifying under such section;

(2) The second trust may qualify as a grantor trust for federal income tax purposes, even if the original trust does not so qualify, except that if such original trust does not so qualify and such second trust will so qualify, in whole or in part, with respect to the settlor, such second trust shall grant such settlor or another person a power that would cause such second trust to cease to be a grantor trust for federal income tax purposes unless such settlor objects in a writing delivered to the trustee before the date the trustee proposes to distribute from such original trust to such second trust; and

(3) When both the original trust and the second trust qualify as grantor trusts for federal income tax purposes and such original trust grants the settlor or another person the power to cause such original trust to cease to be a grantor trust, such second trust shall grant an equivalent power to the settlor or another person unless such settlor objects in a writing delivered to the trustee before the date the trustee proposes to distribute from such original trust to such second trust.

(j) During any period when the original trust owns stock in a Subchapter "S" corporation as defined in Section 1361(a)(1) of the federal Internal Revenue Code, as it existed on February 1, 2018, an authorized trustee shall not exercise a power authorized by subsection (b) of this Code section to distribute part or all of the stock of the Subchapter "S" corporation to a second trust that is not a permitted shareholder under Section 1361(c)(2) of the federal Internal Revenue Code, as it existed on February 1, 2018.

(k) A trustee or other person that reasonably relies on the validity of a distribution of property of the original trust to the second trust under subsection (b) of this Code section or any other law or common law shall not be liable for any action or failure to act as a result of such reliance.

(l) This Code section shall not create or imply a duty for a trustee to exercise a power conferred by this Code section.

(m) If exercise of the power to invade the principal of the original trust would be effective under subsection (b) of this Code section except that the second trust in part does not comply with this Code section, such exercise of the power shall be effective, a provision in such second trust that is not permitted under this Code section shall be void to the extent necessary to comply with this Code section, and a provision required by this Code section to be in such second trust that is not contained in such second trust shall be deemed to be included in such second trust to the extent necessary to comply with this Code section.

(n) The settlor of the original trust shall be deemed to be the settlor of the second trust with respect to the portion of the principal of the original trust subject to the exercise of the power to invade the principal of such original trust under subsection (b) of this Code section.

(o) A debt, liability, or other obligation enforceable against property of the original trust shall be enforceable to the same extent against the property when held by the second trust after exercise of the power to invade the principal of such original trust under subsection (b) of this Code section.

(p) This Code section shall not apply to a trust held solely for charitable purposes.