For purposes of this chapter unless the context otherwise requires, the following terms mean:

(1) FIDUCIARY. Includes a personal representative or trustee.

(2) PERSONAL REPRESENTATIVE. An executor, administrator, special administrator, or a person who performs substantially the same function under the law governing the person's status, and a successor to any of the above.

(3) TRUST. Any express trust, with additions thereto, wherever and however created, or any separate share of a trust, and includes any arrangement, other than an estate, which, although not a trust, has substantially the same effect as a trust.

(4) TRUSTEE. An original, additional, or successor trustee, whether or not appointed or confirmed by a court, and, in the case of an arrangement which is not a trust but which is treated as a trust for purposes of the GST, includes the person in actual or constructive possession of the property subject to such arrangement.

(5) INTERNAL REVENUE CODE. The Internal Revenue Code of 1986 as amended from time to time and successor provisions and codifications thereof.

(6) GST. The generation-skipping transfer tax imposed by Chapter 13 of the Internal Revenue Code.

Any fiduciary who in good faith acts or fails to act shall not be liable to any person for taking or failing to take any action authorized or required by this chapter.

This chapter applies to any trust or estate that may be subject to Chapter 13 of the Internal Revenue Code.

This chapter shall be effective with respect to transfers in trust, and decedents dying, on and after January 1, 1987.

Unless prohibited by the governing instrument, any person having authority under Chapter 13 of the Internal Revenue Code to allocate any GST exemption shall be entitled to allocate such exemption to any property or to exclude any such property from such allocation.

When property is held or to be held in a trust which is or would otherwise be partially exempted from the GST due to the allocation to such trust of a GST exemption, a fiduciary is authorized, but not required, to divide the trust into two separate trusts, of equal or unequal value, in order to create one trust entirely exempt from the GST and a second trust entirely subject to the GST. Other terms and provisions of both trusts will remain substantially identical in all respects to the original trust.

If under the provisions of the governing instrument, property which is held in one trust (the "first trust") is to be transferred or poured over to, merged with, or otherwise combined with property in another trust (the "second trust") and property in the first trust is subject to different treatment for purposes of the GST from the property in the second trust, the fiduciary of the second trust is authorized, but not required, to retain the property in separate trusts in order to preclude or minimize the imposition of the GST upon transfers from either or both trusts, with other terms of each separate trust being substantially identical in all respects.

When a grantor or decedent transfers property into a trust which has, or which pours into another trust which has, more than one beneficiary or class of beneficiaries for GST purposes, and when the grantor or fiduciary allocates the grantor's or decedent's GST exemption for the benefit of one or more, but less than all, beneficiaries or classes of beneficiaries of such trust, or when the surviving spouse of the grantor or decedent, or such surviving spouse's fiduciary, allocates the surviving spouse's GST exemption for the benefit of one or more, but less than all, beneficiaries or classes of beneficiaries of such trust, and when the instrument creating the trust does not specifically prohibit a fiduciary from dividing such trust into separate share trusts, a fiduciary shall divide such trust into two or more separate share trusts, of equal or unequal value, in order to effectuate and carry out the allocation of the grantor's or decedent's GST exemption, or if applicable, the GST exemption of the surviving spouse of the grantor or decedent. Other terms and provisions of each such separate share trust shall, when taken together as a whole, be substantially identical to the original trust. In general, this section contemplates that a fiduciary will divide a single trust into two or more separate share trusts when such division may decrease or eliminate the amount of distributions from such single share trust that would otherwise be subject to the GST.

When a grantor or decedent transfers property into a trust for which an election is made or to be made pursuant to Section 2056(b)(7) or 2523(f) of the Internal Revenue Code to treat such property as qualified terminable interest property (the "QTIP trust"), and when a grantor or fiduciary makes an election pursuant to Section 2652(a)(3) of the Internal Revenue Code to have the grantor or decedent creating such QTIP trust deemed to be the transferor of a portion, but not all, of such QTIP trust for GST purposes, and when a grantor or fiduciary makes an allocation pursuant to Section 2631 of the Internal Revenue Code of any portion of such grantor's or decedent's GST exemption to such portion of the QTIP trust for which a Section 2652(a)(3) election is made or to be made, or to property passing from such portion of the QTIP trust to a trust or person that is a remainder beneficiary of such portion of the QTIP trust at the death of the surviving spouse of the grantor or decedent, and when the instrument creating the QTIP trust does not specifically prohibit a fiduciary from dividing such QTIP trust into separate share trusts, a fiduciary shall divide such QTIP trust into two or more separate share trusts, one of which shall be equal to that portion of the QTIP trust for which a Section 2652(a)(3) election is made or to be made, and the other one or more share trusts shall be divided in such manner as the fiduciary deems appropriate either (1) to effectuate and carry out the allocation of the grantor's or decedent's GST exemption to such portion of the QTIP trust for which a Section 2652(a)(3) election is made, or to property passing from such portion of the QTIP trust to a trust or person that is a remainder beneficiary of such portion of the QTIP trust at the death of the surviving spouse, or (2) to effectuate and carry out the allocation of the surviving spouse's GST exemption to one or more of the share trusts created from the QTIP trust, or to property passing from such one or more share trusts to a trust or person that is a remainder beneficiary of such share trust(s) at the death of the surviving spouse. Upon the death of the surviving spouse of the grantor or decedent, the fiduciary shall pay the estate taxes attributable to the share trust(s) to which an allocation of the GST exemption is made from any other share trust created hereunder to which no GST exemption is allocated, or from one of the other share trusts created hereunder, unless the trust instrument or the will of the surviving spouse specifically provides otherwise; provided, however, that to the extent possible, estate taxes shall not be paid in the manner provided above if to do so could result in an increase in the property subject to the GST on account of such payment of estate taxes. Other terms and provisions of each such separate share trust created from the QTIP trust shall, when taken together as a whole, be substantially identical to the original QTIP trust. In general, this section contemplates that a fiduciary will divide the original QTIP trust into two or more separate share trusts when it may be desirable to allocate both the GST exemption of the grantor or decedent and the GST exemption of the surviving spouse of such grantor or decedent to the original QTIP trust or a share thereof. Moreover, this section contemplates that a fiduciary will pay the estate taxes attributable to the original QTIP trust from a share trust to which no GST exemption is allocated unless to do so could result in an increase in the amount subject to the GST of a share trust to which a GST exemption is allocated.

Distributions provided for by the governing instrument, whether the original trust is divided into separate trusts under the provisions of Section 19-5-3, 19-5-5 or 19-5-6 hereof or the trusts are retained as separate trusts under the provisions of Section 19-5-4 or 19-5-5 hereof, may be made from either or both separate trusts in the absolute and uncontrolled discretion of the fiduciary; provided, however, in determining the total distributions, neither the division of a trust nor the retention as separate trusts shall result in the receipt by any beneficiary of a greater proportion of the total distributions than the beneficiary would have received if the trust or estate had not been so divided or retained separately.

The purpose of this chapter is to authorize a fiduciary to take appropriate action to preclude or minimize to the extent possible the imposition of the GST, and this chapter shall be broadly construed to effectuate this purpose.

A fiduciary may exercise the authority herein granted without prior approval or leave of any court. A fiduciary may also exercise the authority granted in each section contained herein concurrently with the authority granted in each other section contained herein.