55-1-38. Classification of distribution interest.
209 words·~1 min read·
/sd/title-55/chapter-55-1/55-1-38A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
A distribution interest can be classified in three ways:
(1)As a mandatory interest, which is a distribution interest, in which the timing of any distribution must occur within one year from the date the right to the distribution arises, and the trustee has no discretion in determining whether a distribution shall be made or the amount of such distribution;
(2)As a support interest, which is not a mandatory interest but still contains mandatory language such as "shall make distributions" and is coupled with a standard capable of judicial interpretation; or
(3)As a discretionary interest, which is any interest where a trustee has any discretion to make or withhold a distribution.
A discretionary interest may be evidenced by permissive language such as "may make distributions" or it may be evidenced by mandatory distribution language that is negated by the discretionary language of the trust, such as "the trustee shall make distributions in the trustee's sole and absolute discretion." An interest that includes mandatory distribution language such as "shall" but is subsequently qualified by discretionary distribution language shall be classified as a discretionary interest and not as a support or a mandatory interest. A discretionary interest is any interest that is not a mandatory or a support interest.