ACTEC: Request for Input on Discretionary Trusts

The American College of Trust and Estate Counsel (ACTEC) recently responded to a question posed by the Office of Government Ethics concerning income beneficiaries of discretionary trusts. Below is a short summary of their response:

Question Addressed

In a Notice published in the Federal Register on January 3, 2017, the Office of Government Ethics requested comments on the following question: Are there any circumstances under which an eligible income beneficiary of a discretionary trust might, in the absence of a vested remainder interest, be able to compel the trust to make a distribution or payment?

Concise Answer

Under statutory provisions and judicial decisions of most United States jurisdictions, an income beneficiary of a discretionary trust may be able to demonstrate that the trustee breached fiduciary duties in not making a trust distribution to the beneficiary and therefore compel a distribution or payment.