Section 7-1.13. Division of trusts and establishment of separate trusts

(a)  Notwithstanding  any  contrary provision of law, unless expressly
  prohibited by the terms of the disposing instrument:
    (1) the trustee  of  an  express  trust  (which  term  as  defined  in
  paragraph (g) of this section may mean the executor or administrator) is
  authorized  without  prior  court approval or the consent of the persons
  interested to  establish  two  or  more  separate  trusts  in  order  to
  segregate for any of the following purposes:
    (A) property held in trust in which a spouse or surviving spouse has a
  qualifying income interest with respect to which an election has been or
  will  be  made  in  whole  or in part under section 2056(b)(7), 2056A or
  2523(f) of the United States Internal Revenue Code of 1986 from property
  with respect to which no election has been or will be made;
    (B) property held in trust with respect to which a  marital  deduction
  under  section  2056  or 2523 of the United States Internal Revenue Code
  would be available, by election or  otherwise,  from  property  held  in
  trust for persons other than the spouse or surviving spouse, so that one
  or  more  of  such  separate trusts qualify for the deduction under said
  sections;
    (C) property  held  in  trust  with  respect  to  which  a  charitable
  deduction  under  section  2055  or  2522  of the United States Internal
  Revenue Code would be available from property held in trust for  persons
  not  described  in  said  sections, so that one or more of such separate
  trusts qualify for the deduction under said sections;
    (D) property held in trust which is or would be excepted, excluded  or
  exempt  from  or under Chapter 13 (tax on generation-skipping transfers)
  of the United States Internal Revenue Code from such property  which  is
  not  so  excepted,  excluded  or  exempt,  so  that  one or more of such
  separate trusts will have an inclusion ratio of zero, or so that one  or
  more  of such separate trusts qualify for the grandchild exception under
  section 1433(b)-(d) of the Tax Reform Act of 1986, as amended;
    (E) property held in trust for one (of two or more beneficiaries) from
  property held in trust for such other beneficiaries, so that one or more
  of such separate trusts shall be a qualified subchapter  S  trust  under
  section 1361(d) of the United States Internal Revenue Code;
    (F)  property  transferred  in  trust  by a creator (including but not
  limited to a transfer treated as made by a spouse by reason  of  section
  2513   of  the  United  States  Internal  Revenue  Code)  from  property
  transferred in trust by one or more different creators; and
    (G) property transferred in trust by  a  creator  (including  but  not
  limited  to  a transfer treated as made by a spouse by reason of section
  2513 of the United States Internal Revenue Code) pursuant to a disposing
  instrument from property transferred by the  same  creator  pursuant  to
  another disposing instrument;
    (2)  the trustee of an express trust may divide such trust into two or
  more separate trusts, with the consent of all persons interested in  the
  trust  but  without  prior  court  approval, for any reason which is not
  directly contrary to the primary purpose of the trust; and
    (3) the court having  jurisdiction  of  an  express  trust,  upon  the
  petition  of  the  trustee  or of any person interested in the trust and
  upon notice to all such persons, may direct the establishment of two  or
  more separate trusts for any reason not directly contrary to the primary
  purpose of the trust.
    (b)  Unless  the court otherwise directs, the trusts established under
  this section shall  be  deemed  to  have  been  established  as  of  the
  effective   date   of   the  disposing  instrument;  provided  that  the
  establishment of separate trusts under subparagraph two of paragraph (a)

  of this section may become effective upon the date or dates provided  in
  the instrument filed under paragraph (e) of this section.
    (c)  Except  as  implicit  in  the  establishment  of  separate trusts
  authorized by this section,  the  terms  of  the  disposing  instrument,
  subject  to  modifications  approved  by  the  court,  shall govern each
  separate trust established hereunder, except that  separate  trusts  for
  one or more members of a class of beneficiaries may be established under
  subparagraph  two  of paragraph (a) of this section without modification
  by the court if the property  held  in  trust  is  distributed  to  such
  separate  trusts  for  one or more members of such class on the basis of
  share per stirpes,  per  capita,  or  by  representation,  whichever  is
  consistent with the terms of the disposing instrument.
    (d)  Unless the court otherwise directs, and except in the case of the
  establishment  of  separate  trusts  under  clauses  (F)  and   (G)   of
  subparagraph  one  of  paragraph  (a) of this section where the original
  assets remain or can be traced, the property distributed to the separate
  trust shall be fairly representative of appreciation or depreciation and
  shall be based upon the fair market value of the assets on the  date  or
  dates of the distributions of such assets to the separate trusts.
    (e)  Separate  trusts shall be established under subparagraphs one and
  two of paragraph (a) of this section by an instrument or instruments  in
  writing,   signed   and   acknowledged  by  the  trustee  and  if  under
  subparagraph two of paragraph (a) of this section shall also  be  signed
  and  acknowledged  by  all  the  persons interested in the trust (or the
  guardian of the property, committee,  conservator,  adult  guardian,  or
  personal representative of such persons each of whom is hereby empowered
  to consent thereto without prior court approval). Such instruments shall
  be  filed  in  the  office of the clerk of the court having jurisdiction
  over the trust; and a copy  thereof  shall  be  served  on  all  persons
  interested  in  the  trusts (or the guardian of the property, committee,
  conservator,  adult  guardian,  or  personal  representative   of   such
  persons),  by registered or certified mail, return receipt requested, or
  by personal delivery or upon application of the  trustee  in  any  other
  manner directed by the court.
    (f)  The  term  "disposing  instrument"  shall  mean  the  will, trust
  agreement,  instrument  exercising  a  power  of  appointment  or  other
  instrument creating such a trust or transferring property to such trust;
  provided  that  in  the  case  of  an instrument exercising a limited or
  testamentary power of appointment, the term "disposing  instrument"  may
  also  refer  to  the instrument creating such power (if applicable under
  the circumstances).
    (g) In any case where the United States Internal Revenue Code requires
  that an election or other action be made or taken by the executor or  if
  no  trustee of a trust under a will has qualified, the term "trustee" as
  used in this section shall mean the  executor  or  administrator  of  an
  estate.    In  any  such  case, the trustee shall comply with any action
  taken by the executor or administrator under this section.
    (h) For  the  purposes  of  this  section,  the  phrase  "all  persons
  interested in the trust" shall mean all the persons upon whom service of
  process would be required in a proceeding for the judicial settlement of
  the  account  of  the trustee, taking into account section three hundred
  fifteen of the surrogate's court procedure act.
    (i) References to sections of the United States Internal Revenue  Code
  shall  refer  to  the  United  States  Internal  Revenue Code of 1986 as
  amended from time to time, or to corresponding provisions of  subsequent
  internal  revenue laws, and shall also refer to corresponding provisions
  of state law.

    (j) Unless otherwise provided for in  the  disposing  instrument,  the
  commissions   allowed   to   a   trustee  as  determined  under  article
  twenty-three of the surrogate's court procedure  act,  as  amended  from
  time  to  time, shall not be increased by reason of the establishment of
  separate  trusts  pursuant  to subparagraph one of paragraph (a) of this
  section unless  the  court  otherwise  permits  an  increase,  provided,
  however, that such trustee shall be entitled to charge the trust for any
  additional   reasonable   and   necessary   expenses   incurred  in  the
  administration of such separate trusts.
    (k) For purposes of subparagraphs (a)(2) and (3) of  this  section,  a
  division  of  a  trust into two or more separate trusts to permit one or
  more such trusts to be governed by article 11-A and another one or  more
  such  trusts to be governed by 11-2.4 shall be deemed to be for a reason
  which is not directly contrary to  the  primary  purpose  of  the  trust
  unless  such  division  is  expressly  prohibited  by  the  terms of the
  disposing instrument.