Notwithstanding the foregoing provisions of this section, the governing instrument of the second trust may grant a power of appointment to one or more of the beneficiaries of the second trust who are beneficiaries of the first trust

The power of appointment may include the power to appoint trust property to the holder of the power of appointment, the holder's creditors, the holder's estate, the creditors of the holder's estate, or any other person, whether or not the person is a trust beneficiary. A trustee’s power described in this section may be exercised by either an actual distribution of property to one or more second trusts or by modifying the terms of the first trust to create the second trust with or without an actual distribution. If the power is exercised by modifying the terms of the first trust, the trustee may: (1) Treat the second trust created by such modification as a new trust, in which case property of the first trust would be transferred to the second trust; or (2) Treat the second trust as a continuation of the first trust with respect for titling purposes, in which case property of the first trust would not need to be retitled. In the case of an exercise of the power that is structured as a trustee's modification of the first trust, however, notwithstanding § 55-2-18 , the trustee shall provide not less than twenty days advance written notice to the qualified beneficiaries, applying chapter 55-18 , unless the trustee receives written waivers of the notice from the qualified beneficiaries. The trustee's power, which is described in and constrained by this section, remains separate and distinct from trust reformation under §§ 55-3-24 to 55-3-26 , inclusive, or other provisions of law allowing trust modifications. This section applies to any trust administered under the laws of this state, including a trust whose governing jurisdiction is transferred to this state. Source: SL 2007, ch 281 , § 1; SL 2008, ch 257 , § 11; SL 2009, ch 252 , § 17; SL 2011, ch 212 , § 10; SL 2012, ch 233 , § 4; SL 2013, ch 239 , § 16; SL 2017, ch 204 , § 18; SL 2021, ch 207 , § 4; SL 2025, ch 196 , § 6.