(1) 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 court shall not determine that a trustee abused its discretion merely because the court would have exercised the discretion in a different manner or would not have exercised the discretion.
(2) Subject to subsection (3) and unless the terms of the trust expressly indicate that a rule in this subsection does not apply, a person who is a beneficiary and a trustee may not:
(a) Make discretionary distributions of either principal or income to or for the benefit of that trustee, except to provide for that trustee’s health, education, maintenance, or support as described under ss. 2041 and 2514 of the Internal Revenue Code;
(b) Make discretionary allocations of receipts or expenses as between principal and income, unless the trustee acts in a fiduciary capacity whereby the trustee has no power to enlarge or shift any beneficial interest except as an incidental consequence of the discharge of the trustee’s fiduciary duties;
(c) Make discretionary distributions of either principal or income to satisfy any of the trustee’s legal support obligations; or
(d) Exercise any other power, including, but not limited to, the right to remove or to replace any trustee, so as to cause the powers enumerated in paragraph (a), paragraph (b), or paragraph (c) to be exercised on behalf of, or for the benefit of, a beneficiary who is also a trustee.
(3) Subsection (2) does not apply to:
(a) A power held by the settlor of the trust;
(b) A power held by the settlor’s spouse who is the trustee of a trust for which a marital deduction, as defined in s. 2056(a) or s. 2523(a) of the Internal Revenue Code of 1986, as amended, was previously allowed;
(c) Any trust during any period that the trust may be revoked or amended by its settlor; or
(d) A trust if contributions to the trust qualify for the annual exclusion under s. 2503(c) of the Internal Revenue Code of 1986, as amended.
(4) A power whose exercise is limited or prohibited by subsection (2) may be exercised by the remaining trustees whose exercise of the power is not so limited or prohibited. If there is no trustee qualified to exercise the power, on petition by any qualified beneficiary, the court may appoint an independent trustee with authority to exercise the power.
(5) A person who has the right to remove or to replace a trustee does not possess nor may that person be deemed to possess, by virtue of having that right, the powers of the trustee that is subject to removal or to replacement.