§ 30-4-2.1-14 — Rules of interpretation concerning discretionary interests

Indiana § 30-4-2.1-14

• Jurisdiction: Indiana
• Art. 4: TRUST CODE
• Ch. 2.1: Rules for Interpretation of Trusts

Text

(a) The following rules apply only to
discretionary interests (as defined in section 14.5 of this chapter):
(1) A discretionary interest is a mere expectancy that is neither a
property interest nor an enforceable right.
(2) A creditor may not:
(A) require a trustee to exercise the trustee's discretion to make
a distribution; or
(B) cause a court to foreclose a discretionary interest.
(3) A court may review a trustee's distribution discretion only if
the trustee acts dishonestly or with an improper motive.
(b) Words such as sole, absolute, uncontrolled, or unfettered
discretion dispense with the trustee acting reasonably.
(c) Absent express language to the contrary, if the distribution
language in a discretionary interest permits unequal distributions
between beneficiaries or distributions to the exclusion of other
beneficiaries, a trustee may, in the trustee's discretion, distribute all of
the accumulated, accrued, or undistributed income and principal to one
(1) beneficiary to the exclusion of the other beneficiaries.
(d) Regardless of whether a beneficiary has any outstanding
creditors, a trustee of a discretionary interest may directly pay any
expense on behalf of the beneficiary and may exhaust the income and
principal of the trust for the benefit of the beneficiary. A trustee is not
liable to a creditor for paying the expenses of a beneficiary who holds
a discretionary interest.

Legislative History

As added by P.L.6-2010, SEC.14. Amended by P.L.36-2011, SEC.7; P.L.6-2012, SEC.202.