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.

If you are ready to start your case, then please give us a call or fill out our Get Help Now form. A comprehensive overview of California Probate is available here. Should you have additional questions about trust litigation, you will find plenty of useful information in our Learning Center.