Absolute Discretion
Some trusts are discretionary: this meaning that the trustee holds the power to make decisions such as when, how much, and if beneficiaries receive property for the trust. In these types of trusts, the trustees have absolute discretion in that they hold governing power in making those decisions, with only vary rare exceptions. Specifically, an exception would be if a Court were to find the trustee was acting in “bad faith”, meaning that the trustee is not acting along with the purpose for which the trust was initially created for.
Examples of when a beneficiary might attempt to challenge a trust are:
- The trustee is ignoring requests by a beneficiary for a payment without giving an explanation;
- The trustee is refusing to give a beneficiary a payment from the trust due a personal prejudice against the beneficiary
- The trustee is using funds from the trust for their own personal use
- Trustee is acting not in line with the purpose of the trust or the settlor’s wishes
Bust the Trust (the Rule in Saunders v. Vautier)
Called "the rule in Saunders v. Vautier" the law allows that if all of beneficiaries of a trust are capable and of adult age, then the beneficiaries may call upon the trustee to terminate the trust and distribute the trust property as they direct.
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