(a) For purposes of this section: (1) âGrantor trustâ means a trust as to which a settlor of a first trust is considered the owner under Sections 671 to 677, inclusive, or Section 679 of the Internal Revenue Code (26 U.S.C. Secs. 671 to 677, 679). (2) âNongrantor trustâ means a trust that is not a grantor trust. (3) âQualified benefits propertyâ means property subject to the minimum distribution requirements of Section 401(a)(9) of the Internal Revenue Code (26 U.S.C. Sec. 401(a)(9)), and any applicable regulations, or to any similar requirements that refer to Section 401(a)(9) of the Internal Revenue Code (26 U.S.C. Sec. 401(a)(9)) or the regulations. (b) An exercise of the decanting power is subject to all of the following limitations: (1) If a first trust contains property that qualified, or would have qualified but for provisions of this part other than this section, for a marital deduction for purposes of the gift or estate tax under the Internal Revenue Code or a state gift, estate, or inheritance tax, the second trust instrument shall not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified. (2) If the first trust contains property that qualified, or would have qualified but for provisions of this part other than this section, for a charitable deduction for purposes of the income, gift, or estate tax under the Internal Revenue Code or a state income, gift, estate, or inheritance tax, the second trust instrument shall not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified. (3) If the first trust contains property that qualified, or would have qualified but for provisions of this part other than this section, for the exclusion from the gift tax described in Section 2503(b) of the Internal Revenue Code (26 U.S.C. Sec. 2503(b)), the second trust instrument shall not include or omit a term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under Section 2503(b) of the Internal Revenue Code (26 U.S.C. Sec. 2503(b)). If the first trust contains property that qualified, or would have qualified but for provisions of this part other than this section, for the exclusion from the gift tax described in Section 2503(b) of the Internal Revenue Code (26 U.S.C. Sec. 2503(b)) by application of Section 2503(c) of the Internal Revenue Code (26 U.S.C. Sec. 2503(c)), the second trust instrument shall not include or omit a term that, if included or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under Section 2503(c) of the Internal Revenue Code (26 U.S.C. Sec. 2503(c)). (4) If the property of the first trust includes shares of stock in an S-corporation, as defined in Section 1361 of the Internal Revenue Code (26 U.S.C. Sec. 1361) and the first trust is, or but for provisions of this part other than this section would be, a permitted shareholder under any provision of Section 1361 of the Internal Revenue Code (26 U.S.C. Sec. 1361), an authorized fiduciary may exercise the power with respect to part or all of the S-corporation stock only if any second trust receiving the stock is a permitted shareholder under Section 1361(c)(2) of the Internal Revenue Code (26 U.S.C. Sec. 1361(c)(2)). If the property of the first trust includes shares
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