[ §554D-504] Discretionary trusts; effect of standard.

268 words·~1 min read·/hi/554d-504

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)Except as otherwise provided in subsection (b), regardless of whether a trust contains a spendthrift provision, a creditor of a beneficiary shall not compel a distribution that is subject to the trustee's discretion, even if:

(1)The discretion is expressed in the form of a standard of distribution; or

(2)The trustee has abused the discretion.

(b)To the extent a trustee has not complied with a standard of distribution or has abused a discretion:

(1)A distribution may be ordered by the court to satisfy a judgment or court order against the beneficiary for support or maintenance of the beneficiary's child; and

(2)The court shall direct the trustee to pay to or for the benefit of the beneficiary's child, an amount as is equitable under the circumstances but no more than the amount the trustee would have been required to distribute to or for the benefit of the beneficiary had the trustee complied with the standard or not abused the discretion.

(c)This section shall not limit the right of a beneficiary to maintain a judicial proceeding against a trustee for an abuse of discretion or failure to comply with a standard for distribution.

(d)If the trustee's or cotrustee's discretion to make distributions for the trustee's or cotrustee's own benefit is limited by an ascertainable standard, a creditor shall not reach or compel distribution of the beneficial interest except to the extent the interest would be subject to the creditor's claim were the beneficiary not acting as trustee or cotrustee. [L 2021, c 32, pt of §2]