(1) The holder of a power of appointment may represent and bind persons whose interests, as permissible appointees, takers in default, or otherwise, are subject to the power.
(2) The takers in default of the exercise of a power of appointment may represent and bind persons whose interests, as permissible appointees, are subject to the power.
(3) Subsection (1) does not apply to:
(a) Any matter determined by the court to involve fraud or bad faith by the trustee; or
(b) A power of appointment held by a person while the person is the sole trustee.
(4) As used in this section, the term “power of appointment” does not include a power of a trustee to make discretionary distributions of trust property.