Article On A Trustees Exercise Of Discretion

Ivan Taback (Skadden, Arps, Slate, Meagher, & Flom LLP) & David Pratt (Proskauer Rose LLP) recently published an article entitled, When The Rubber Meets The Road: A Discussion Regarding A Trustee’s Exercise Of Discretion, 49 Real Property, Probate and Trust Law Journal, 3 (2015). Provided below is an excerpt from the article:

States have different rules concerning when a trustee has “abused” his discretion and, relatedly, whether, and to what extent, a trustee acting under a particular discretionary power is permitted to decant a trust. Invariably, the trustee needs some level of discretion, which depends on the state law applicable to the trust. This Article analyzes the recent trends in the judicial and legislative treatment of grants and exercises of absolute discretion and the standard of care that courts generally apply to a trustee’s exercise of discretion. It then addresses the manner in which the states’ trust decanting rules differ vis-à-vis discretionary standards, and includes a survey of each state’s laws regarding the review of a trustee’s exercise of discretion.