Understanding Discretionary Distributions for California Trustees

The Trustees have the Right to make Discretionary Distributions

While some trusts contain clear guidance with regard to distributions to beneficiaries, others leave a subjective standard for the trustee to follow. This is referred to as a trustee’s right to make discretionary distributions. Unfortunately for inexperienced trustees, it may be confusing to know when it is appropriate to make a distribution. If you are the trustee of a California trust and need guidance relating to discretionary distributions to beneficiaries, contact an experienced trust attorney for assistance.

The following is an overview of discretionary distributions in California:

• Discretionary distributions allow the trustee to decide how much income or principal a beneficiary or beneficiaries will receive under the trust and when they will receive it.
• Discretionary distributions require the trustee to rely on his or her own judgment relating to such distributions.
• The degree of discretion given to the trustee is determined by the language contained in the trust document as well as the intent of the individual who created the trust.
• Even if a trustee is given complete discretion over distributions, he or she is still required to act in accordance with fiduciary standards outlined in California trust law.
• Despite the ability to use discretion in making distributions, the trustee must also act in good faith and in accordance with the purposes of the trust.

When serving as a trustee, it is important to act in accordance with California law. Knowing what is appropriate and an important aspect of preventing disputes.

 

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