§60-175.89. Applicable trust provisions for beneficiaries holding

368 words·~2 min read·/ok/title-60-property/60-175-89

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

discretionary interests.

The following provisions apply only to trusts with one or more beneficiaries holding discretionary interests:

1. A discretionary interest is neither a property interest nor an enforceable right to a distribution; it is a mere expectancy; provided, however, a beneficiary holding a discretionary interest has an equitable interest to bring an action against the trustee within the judicial review standard of paragraph 4 of this section. No creditor, regardless of whether the Oklahoma Discretionary and Special Needs Trust Act provides for any exception creditors, shall attach, require the trustee to exercise the trustee’s discretion to make a distribution, or cause a court to judicially sell a discretionary interest;

2. Regardless of whether a beneficiary has any outstanding creditor, a trustee 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 shall not be liable to any creditor or beneficiary for paying the expenses of a beneficiary;

3. A creditor, including an exception creditor, of a beneficiary has no greater rights in a discretionary interest than a beneficiary, and shall not compel a distribution that is subject to the discretion of the trustee, nor may a court order a distribution;

4. A court may review a distribution discretion of a trustee only if it is proved by clear and convincing evidence that the trustee:

a. acts dishonestly,

b. acts with an improper motive, or

c. fails to act. The sole factor not to make a distribution does not constitute a failure to act. There is no standard of reasonableness under the above review standard;

5. In addition to any limitations of rights of creditors, if the trust contains a spendthrift provision, a current interest in a discretionary trust also receives the benefits of any spendthrift protection; and

6. Absent express language to the contrary, in the event that the distribution language permits unequal distributions between beneficiaries or distributions to the exclusion of other beneficiaries, the trustee may distribute all of the accumulated, accrued, or undistributed income and principal to one beneficiary in the discretion of the trustee. Added by Laws 2010, c. 280, § 9, eff. Nov. 1, 2010.