Seven Steps Before Making Orange County Discretionary Trust Distributions

As the trustee of a living trust in Orange County, you may have to make crucial decisions relating to distributions of the trust assets. It is common for a trust to grant some level of discretion to a trustee with regard to distributions of trust income or principal at certain periods. Before you make these distributions, however, it is important to take certain steps. Distributions that are made without following these critical steps could potentially be subject to challenge by beneficiaries or creditors. These beneficiaries or creditors may claim that the trustee made unauthorized or improper distributions of the trust property.

What steps should a trustee take before making a discretionary distribution of trust assets? 

  1. Review the specific language contained in the Orange County living trust for guidance regarding discretionary trust distributions.
  2. Carefully consider the overall purpose of the trust. For example, if the trust is set up primarily for purposes of education of the beneficiaries, distributions for educational expenses should be favored.
  3. Consider the type of assets within the trust, including liquidity and current value.
  4. Assess the specific needs of each beneficiary.
  5. If the beneficiary is a minor, consider whether a custodian must be appointed in order for the child to receive a distribution of the trust property.
  6. If the beneficiary has access to ample outside resources, a discretionary distribution may not be appropriate under every circumstance.
  7. Carefully consider the overall wishes of the person who set up the trust, and whether the grantor desired the beneficiaries to maintain a certain lifestyle.

To learn more about discretionary distributions of trust assets, consult with an experienced Orange County trust administration attorney today. Contact our office today at (714) 459-5481 for more information.

James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm
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