Okla. Stat. tit. 60, § 60-175.104

TRUSTEE'S POWER TO ADJUST

A. A trustee may adjust between principal and income to the

extent the trustee considers necessary if the trustee invests and

manages trust assets as a prudent investor, the terms of the trust

describe the amount that may or must be distributed to a beneficiary

by referring to the trust's income, and the trustee determines,

after applying the rules in subsection A of Section 175.103 of Title

60 of the Oklahoma Statutes, that the trustee is unable to comply

with subsection B of Section 175.103 of Title 60 of the Oklahoma

Statutes.

B. In deciding whether and to what extent to exercise the power

conferred by subsection A of this section, a trustee shall consider

all factors relevant to the trust and its beneficiaries, including

the following factors to the extent they are relevant:

1. The nature, purpose, and expected duration of the trust;

2. The intent of the settlor;

3. The identity and circumstances of the beneficiaries;

4. The needs for liquidity, regularity of income, and

preservation and appreciation of capital;

5. The assets held in the trust; the extent to which they

consist of financial assets, interests in closely held enterprises,

tangible and intangible personal property, or real property; the

extent to which an asset is used by a beneficiary; and whether an

asset was purchased by the trustee or received from the settlor;

6. The net amount allocated to income under the other sections

of this act and the increase or decrease in the value of the

principal assets, which the trustee may estimate as to assets for

which market values are not readily available;

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7. Whether and to what extent the terms of the trust give the

trustee the power to invade principal or accumulate income or

prohibit the trustee from invading principal or accumulating income,

and the extent to which the trustee has exercised a power from time

to time to invade principal or accumulate income;

8. The actual and anticipated effect of economic conditions on

principal and income and effects of inflation and deflation; and

9. The anticipated tax consequences of an adjustment.

C. A trustee may not make an adjustment:

1. That diminishes the income interest in a trust that requires

all of the income to be paid at least annually to a spouse and for

which an estate tax or gift tax marital deduction would be allowed,

in whole or in part, if the trustee did not have the power to make

the adjustment;

2. That reduces the actuarial value of the income interest in a

trust to which a person transfers property with the intent to

qualify for a gift tax exclusion;

3. That changes the amount payable to a beneficiary as a fixed

annuity or a fixed fraction of the value of the trust assets;

4. From any amount that is permanently set aside for charitable

purposes under a will or the terms of a trust unless both income and

principal are so set aside;

5. If possessing or exercising the power to make an adjustment

causes an individual to be treated as the owner of all or part of

the trust for income tax purposes, and the individual would not be

treated as the owner if the trustee did not possess the power to

make an adjustment;

6. If possessing or exercising the power to make an adjustment

causes all or part of the trust assets to be included for estate tax

purposes in the estate of an individual who has the power to remove

a trustee or appoint a trustee, or both, and the assets would not be

included in the estate of the individual if the trustee did not

possess the power to make an adjustment;

7. If the trustee is a beneficiary of the trust (except where

the trustee is a charitable, religious or educational organization

recognized as tax exempt under Section 501(c)(3) of the Internal

Revenue Code and as a beneficiary will hold the beneficial interest

as an institutional endowment fund as that term is defined in the
al if the trustee did not

possess the power to make an adjustment;

7. If the trustee is a beneficiary of the trust (except where

the trustee is a charitable, religious or educational organization

recognized as tax exempt under Section 501(c)(3) of the Internal

Revenue Code and as a beneficiary will hold the beneficial interest

as an institutional endowment fund as that term is defined in the

Oklahoma Uniform Management of Institutional Endowment Funds Act

solely for the benefit of one or more other charitable, religious or

educational organizations recognized as tax exempt under Section

501(c)(3) of the Internal Revenue Code); or

8. If the trustee is not a beneficiary, but the adjustment

would benefit the trustee directly or indirectly.

D. If paragraph 5, 6, 7, or 8 of subsection C of this section

applies to a trustee and there is more than one trustee, a cotrustee

to whom the provision does not apply may make the adjustment unless

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the exercise of the power by the remaining trustee or trustees is

not permitted by the terms of the trust.

E. A trustee may release the entire power conferred by

subsection A of this section or may release only the power to adjust

from income to principal or the power to adjust from principal to

income if the trustee is uncertain about whether possessing or

exercising the power will cause a result described in paragraphs 1

through 6 or 8 of subsection C of this section or if the trustee

determines that possessing or exercising the power will or may

deprive the trust of a tax benefit or impose a tax burden not

described in subsection C of this section. The release may be

permanent or for a specified period, including a period measured by

the life of an individual.

F. Terms of a trust that limit the power of a trustee to make

an adjustment between principal and income do not affect the

application of this section unless it is clear from the terms of the

trust that the terms are intended to deny the trustee the power of

adjustment conferred by subsection A of this section.