When a trustee has discretionary power over distributions to a beneficiary, that beneficiary may wonder what can be done to make sure that they get the distributions that they are supposed to according to the terms of the trust. While many times, these distributions may be uneventful and go smoothly, there are other times where a trustee and beneficiary are not in agreement about how funds should be distributed, leading to legal conflict.
The clearest and best written trusts make it easy to tell when a distribution is required. Unfortunately, only a small majority of trusts are clear and well-written. In some cases, language could be interpreted to mean that the trustee must distribute funds in a way to keep the beneficiary up to the standard of living that they used to enjoy. However, other trusts may only direct that the trustee use the funds for things such as medical or emergency expenses. There are other trusts that simply allow the trustee to use their discretion entirely, with no additional guidance as to how. It all depends on the language that the attorney who drew up the trust document used and what was requested by the person who set up the trust.
This does not mean, however, that a trustee has unlimited power when it comes to distributing funds. A trustee cannot simply refuse to distribute discretionary funds for a bad reason or no reason. A trustee still has to act reasonably and fairly when making distributions from the trust, meaning that they can’t simply refuse to make distributions without some sort of good cause. For example, if the trust document says that funds from the trust should be used for educational expenses, it would most likely be found to be unreasonable on the part of the trustee to refuse to pay for textbooks.
When a trustee refuses to make a distribution, there are a few things that the beneficiary may want to try in order to get the money they feel they deserve. A first step could be as simple as having a New York estate attorney write a demand letter on the beneficiary’s behalf making a demand for distribution of the estate. This could be a simple solution to keep out of court.
If this does not work, then litigation may be the only option. If this is the case, the beneficiary may have to file suit against the trustee to have the court force them to release the funds. However, before embarking on this step, the beneficiary should be absolutely sure that the trustee is actually not acting within their discretion when refusing the distribution.
Call the Law Offices of Albert Goodwin at (212) 233-1233, New York estate, guardianship, wills, trust, medicaid and probate lawyer, and make an appointment to discuss.