Increasingly, trust instruments grant trustees “discretion” to do certain acts. Drafters include this language to account for unanticipated circumstances and make a trustee’s life easier. But even where a trustee has discretion, they can act improperly.
“A grant of absolute discretion to a trustee is not a roving commission – the trustee must be guided by the interest of the beneficiary and must further trust purposes in the exercise of his power.” American Cancer Soc. v. Hammerstein, 631 S.W.2d 858, 864 (Mo. App. E.D. 1981).
There are several factors to consider whether a trustee commits a breach of trust with a discretionary act:
(1) the extent of the discretion conferred upon the trustee by the terms of the trust;
(2) the purposes of the trust;
(3) the nature of the power;
(4) the existence or non-existence, the definiteness or indefiniteness, of an external standard
by which the reasonableness of the trustee’s conduct can be judged;
(5) the motive of the trustee in exercising or refraining from exercising the power;
(6) the existence or non-existence of an interest in the trustee conflicting with that of the beneficiaries.
O’Riley v. US Bank, NA, S.W.3d 400, 407 (Mo. App. W.D. 2013). Therefore, a trustee’s “discretion” depends greatly on context and is not necessarily a straight-forward answer.