Asked in Estate Planning and Gov & Administrative Law for Illinois

Q: Is it actionable for a trustee to withhold promised distributions unless a beneficiary stops exercising their rights?

Is it legal, ethical, or actionable for a trustee to withhold distributions that they previously promised to send for the beneficiary's health, education, maintenance, and support until the beneficiary sends all their family's receipts, bank, credit card, and student loan statements for months on end, and essentially agrees to not take the trustee to court for refusing to provide a trust accounting and other issues? Let's say the trust document says the trustee may make distributions for the beneficiaries health and maintenance in general comfort taking into account what they know about their current income and readily marketable assets. Is demanding all that extra documentation, for the first time ever, as an intimidation tactic and perhaps to try to get dirt on the beneficiary to spin in court, some kind of abuse of power/rights under color of law or office? This is in Illinois.

1 Lawyer Answer
Michael Goldberg
Michael Goldberg
  • Estate Planning Lawyer
  • Libertyville, IL
  • Licensed in Illinois

A: If the trust gives the trustee discretion to make distributions to a beneficiary based on a particular standard, the trustee is permitted to ask for evidence from the beneficiary in order to evaluate whether a distribution should be made. This is not illegal, and is often a common feature of trusts. On the other hand, the trustee always has the obligation to act in "good faith" when administering a trust for the benefit of beneficiaries. If the trustee is asking for documentation with the goal of harming the beneficiary rather than for the purpose of following the trust's intent, then that could be considered a violation of the trustee's fiduciary duty, which would subject the trustee to being removed from their office. However, this would be difficult to prove and would require significant evidence regarding the trustee's primary motivation.

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