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Trustee Discretion, Decision-Making

One of a trustee’s most important duties is to administer a trust in accordance with its terms. Many breach of trust cases, therefore, revolve around whether a trustee has followed a trust’s provisions and worked in the beneficiaries’ best interests. Understanding the language and provisions of the trust is important in this type of litigation.

When analyzing a trust’s language, the key rule of interpretation is that the trust-maker’s intent is controlling and such intention must be ascertained primarily from the trust document as a whole. Hudson v. UMB Bank, N.A., 447 S.W.3d 714, 721 (Mo. Ct. App. 2014). In many instances, the trust-maker will include language granting the trustee broad discretion in decision-making. To give an example, a trust instrument will frequently authorize a trustee to make monetary distributions directly to/for a beneficiary in the trustee’s discretion. Other times a trust will be more specific and articulate that distributions should be made for school, medical expenses, or when a beneficiary reaches a certain age, etc. 

Is a trustee ever responsible for abusing his/her/its discretion? The law allows a trust-maker to confer upon a trustee broad discretion in decision-making. Deutsch v. Wolf, 994 S.W.2d 561, 567 (Mo. 1999). When a trust-maker vests sole discretion in a matter in a trustee — and provides no objective standard by which to evaluate the reasonableness of the conduct — a court cannot interfere, unless the trustee willfully abused his/her/its discretion or acts arbitrarily, fraudulently or with an improper motive. In the Matter of Heisserer, 797 S.W.2d 864, 870 (Mo. Ct. App. 1990). 

 

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