The common perspective of the position of trustee’s use of discretion is that there is blanket or wholesale discretion to do exactly as their personal whims dictate. Any beneficiary under a trust should be weary to consider this position.
Specific powers are often provided with a trust deed. These may relate to either how the administration of the trust takes place or the manner in which the trustee passes to beneficiaries’ funds/assets from the trust.
Trustees are however required to take notice of the wishes of the Donor of the trust assets and consider the purpose of the trust when attending to the needs of a beneficiary and exercising judgement over the use of discretion, since arbitrary decisions can be contested.
An example of such decision would be the advancement to beneficiaries of capital from the trust fund. Often, as would seem logical, any decision to reduce capital will have the effect of reducing the investment from which income arises. Circumstances that would dictate any such need and will differ with each trust, case by case. However, such claims are made to the High Court and are supported by authority. Circumstances can arise where the court would direct the trustees to act in a particular way.
As with all litigation, any such claim would need to be one which challenged illogical or whimsical decision making.
If you would like further information about the above information, please contact Stuart Grace or call the Litigation Department on 01825 762281.
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