The "Sole and Absolute" Discretion of the Trustee

One common misconception regarding the powers and duties of the trustee of an irrevocable trust arises as a result of language that purports to give the trustee sole and absolute discretion to take a particular action or to make a particular disposition of trust property.  For example, a trust may give the trustee “sole and absolute discretion” to distribute property to a beneficiary for the beneficiary’s heath, education, maintenance, and support.

While the phrase “sole and absolute discretion” appears to clearly articulate a sweeping power of the trustee, such discretion is not quite as broad as it seems.  Fla. Stat. § 736.0814(1) states:

“Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including use of such terms as “absolute,” “sole,” or “uncontrolled,” the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.

As a result of this statute, a trustee who is granted sole and absolute discretion by the terms of the trust does not, in fact, have sole and absolute discretion in the administration of the trust under Florida law.  The trustee must still exercise discretionary power in good faith, in accordance with the terms and purposes of the trust, and in the interests of the beneficiaries.

It is important to note that the propriety of the trustee’s exercise of discretion will typically be based on the specific set of circumstances of the matter.  However, as a general matter, where a trustee has “sole and absolute discretion” to distribute property to a beneficiary for the beneficiary’s health, education, maintenance, and support, and where the beneficiary clearly has a need for such property under the terms of the trust, a trustee would likely commit a breach of trust where the trustee refuses to make such distribution, particular if such refusal is in bad faith.

If you are currently the trustee of a trust and need guidance as to the proper administration of the trust, or if you are the beneficiary of a trust and you do not believe that the trustee has taken steps to properly administer the trust (or merely have questions regarding your rights), please contact Matthew A. Linde, P.A., and set up a time to talk to me, Robin D. Merriman II, Esq.

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