GENERAL ASSEMBLY OF NORTH CAROLINA
1991 SESSION

CHAPTER 174
SENATE BILL 780

AN ACT TO REWRITE THE LAW RESTRICTING THE EXERCISE OF POWER FOR A FIDUCIARY'S BENEFIT.

The General Assembly of North Carolina enacts:

Section 1.  G.S. 32-34 reads as rewritten:
"§ 32-34.  Restriction on exercise of power for fiduciary's benefit.
				(a)	For purposes of this section:
(1)	'General power of appointment' means any power that would cause income to be taxed to the fiduciary in his individual capacity under section 678 of the Internal Revenue Code and any power that would be a general power of appointment, in whole or in part, under section 2041(b)(1) or 2514(c) of the Internal Revenue Code.
(2)	'Internal Revenue Code' means the 'Code' as defined in G.S 105-2.1.
(3)	The term 'fiduciary' has the meaning set forth in G.S 32-25.
(b)	Unless application of this section is clearly negated by specific reference in the will, trust document, or other written instrument appointing a fiduciary, the following provisions apply to any fiduciary, whether acting as a sole fiduciary or as a co-fiduciary.
(1)	Any power conferred upon a fiduciary in his capacity as a fiduciary, but not in his capacity as a beneficiary, which would, except for this section, constitute in whole or in part, a general power of appointment, may not be exercised by the fiduciary in favor of himself, his estate, his creditors, or the creditors of his estate, but may be exercised in any manner provided in subdivision (2) of this subsection.
(2)	A power described in subdivision (1) of this subsection may be exercised as follows:
a.	The fiduciary may exercise the power in favor of a person other than himself, his estate, his creditors, or the creditors of his estate.
b.	If the power described in subdivision (1) of this subsection is conferred upon two or more fiduciaries, it may be exercised by the fiduciary or fiduciaries who are not disqualified from exercising the power as if they were the only fiduciary or fiduciaries.  
c.	If all of the serving fiduciaries are disqualified from exercising a power, the court that would have jurisdiction to appoint a fiduciary under the instrument, if there were no fiduciary currently serving, shall appoint a special fiduciary whose only power is to exercise the power that cannot be exercised by the other fiduciaries by reason of subdivision (1) of this subsection.
(3)	Any power conferred upon the fiduciary in his capacity as a fiduciary to allocate receipts and expenses as between income and principal in his own favor must be exercised in accordance with the provisions of Article 2 of Chapter 37 of the General Statutes, the Principal and Income Act of 1973.
(c)	Subsection (b) of this section does not apply to revocable trusts in which the fiduciary of the trust is also the creator of the trust and is still living.
(d)	This section applies to all fiduciary relationships in existence on July 1, 1991, and to all other fiduciary relationships that come into existence after that date. The provisions of subsection (b) of this section are declaratory of existing law, and neither modify nor amend existing fiduciary relationships."
Sec. 2.  This act becomes effective July 1, 1991.
In the General Assembly read three times and ratified this the 30th day of May, 1991.

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James C. Gardner
President of the Senate

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Daniel Blue, Jr.
Speaker of the House of Representatives