As the trustee of a living trust in Orange County, you may find yourself with the authority to make discretionary distributions of trust income to certain beneficiaries. A common guideline that is often contained in these trusts directs the trustee to make these distributions for the support of the beneficiary. While this may seem straightforward on first glance, in practice, understanding exactly which payments fall into these categories can be tricky.
Generally, support includes not only the beneficiary, but also the members of the beneficiary’s household, as well as the costs of education for the beneficiary’s child. These discretionary support payments may also sometimes be applied for the benefit of a current spouse or minor child of a beneficiary who does not reside with the beneficiary, but whom the beneficiary chooses to or is required to support.
What are some examples of expenses that fall under the discretionary support standard? The following are seven common items for which a trustee can distribute trust assets under this discretionary support standard:
- Regular mortgage payments
- Property taxes
- Suitable health insurance
- Appropriate healthcare
- Expenses for existing life or property insurance policies
- Vacations that are in keeping with the traditional patterns of the family
- Charitable donations that are customary for the family
While the terms of the trust may grant significant flexibility and authority to the trustee for making discretionary distributions, it is important to ensure that the distributions are appropriate. A trustee who makes distributions that are not permitted under a trust document may expose himself to potential liability or attack from other beneficiaries or creditors of the trust. To learn more about administering a trust and making discretionary distributions to beneficiaries, contact an experienced Orange County trust administration attorney today. Call our office at (714) 459-5481 for a consultation.