The trustee in a trust doesn’t have absolute power even if he or she is given “absolute and uncontrolled discretion.” In this blog post, we overview the relationship between the trustee and a beneficiary and discuss some of the situations in which a trustee may be obligated to accelerate distributions to a beneficiary. If you are facing a possible dispute over a trust, reach out to one of our Dallas- or Plano-based attorneys for a consultation, as no two situations are the same.
When a Trust Beneficiary can Demand Distributions from a Trustee
A trustee owes each beneficiary of a trust the duty to act reasonably and in a manner appropriate for the trust she administers. Beneficiaries can be protected – but are also sometimes frustrated – when a person creating a trust limits a trustee’s power to make distributions to a beneficiary. The most common standard of distribution provides that a beneficiary is entitled to distributions of income and/or principal from a trust to provide for that beneficiary’s health, education, maintenance, and support.
Support and maintenance standards entitles the beneficiary to receive distributions based on:
(1) the size of the trust estate;
(2) the beneficiary’s age, life expectancy, and condition of life;
(3) the beneficiary’s present and future needs;
(4) the other resources available to the beneficiary or the beneficiary’s individual wealth; and
(5) the beneficiary’s present and future health, both mental and physical.
Even if a trust states that the trustee has “absolute and uncontrolled discretion,” the trustee must act reasonably at all times and cannot withhold distributions simply because the trustee wants to do so. The trustee must balance her duty to make distributions with her duty to manage the trust prudently and responsibly to preserve it for the beneficiaries’ future support and maintenance. That being said, if a beneficiary who is entitled to distributions for support and is either not receiving distributions or is receiving inadequate distributions, the beneficiary may want to consider bringing an action to compel the trustee to make appropriate distributions.
In a complex inheritance among family members and others, it may be possible that a trustee has some differences of opinion with a beneficiary. Indeed, a trustee may feel that he or she is entitled to act with “absolute and uncontrolled discretion,” while a beneficiary may feel that accelerated distributions are needed. If you are facing such a possible situation, our Dallas attorneys can provide a consultation. With an office in Dallas and a satellite office in Plano, Burdette & Rice make it easy to seek out a professional consultation on these types of issues. Inheritance can be a complex and emotional situation, so reach out for a consultation, today, as no two situations are exactly alike.