Bill > SB178

This bill amends the Alabama Principal and Income Act to grant trustees more flexibility in managing trust assets by allowing them to adjust between principal and income under specific conditions. Previously, a trustee's power to make such adjustments was contingent on the trust document explicitly granting this power and referencing a specific section of the law. Now, a trustee can make these adjustments if they manage trust assets prudently, the trust's terms refer to income distributions, and the trustee determines they cannot comply with certain distribution rules. The bill also outlines numerous factors a trustee must consider when deciding to make an adjustment, such as the trust's purpose, beneficiaries' needs, and the preservation of capital, while also listing specific situations where adjustments are prohibited, including those that would negatively impact tax benefits or alter fixed annuity or charitable distributions. The bill clarifies that existing trust terms limiting a trustee's power to adjust will only apply if it's clear the intent was to deny this power, and it will become effective on October 1, 2026.

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https://alison.legislature.state.al.us/bill-search