With the vast majority of trusts, a beneficiary’s right to inherit becomes vested (i.e., locked in place) once the settlor has died. It’s also common for beneficiaries to receive their inheritances “outright,” which means the trustee must make a distribution to the beneficiary as quickly as possible.
Even though the trustee may not have the power to change or remove beneficiaries of a trust, the trust may give the trustee the power to delay or not make distributions from the trust.
For example, the trust may allow the trustee to decide when to make distributions to a beneficiary. Or, the trust may allow the trustee to decide how much property is distributed to a beneficiary, or whether a beneficiary receives a distribution of trust property at all. Trusts like these are sometimes called discretionary trusts, and they generally allow the trustee to exercise their discretion in determining which beneficiaries will inherit, when they will inherit and the amount of each beneficiary’s inheritance.
But even where the trust gives the trustee the power to delay or not make distributions to beneficiaries, California law generally requires that the trustee’s exercise of discretion be reasonable. In other words, there must be a good reason for a trustee’s decision to make or not make a discretionary distribution.
Many factors must be taken into consideration when determining whether a trustee has acted reasonably. A probate lawyer can assist both trustees and trust beneficiaries with understanding a trust’s terms and evaluating a trustee’s exercise of discretion. If a trustee is acting unreasonably, a probate lawyer can help beneficiaries enforce their inheritance rights.
