A trustee has powers established by the trust terms, the laws of the state of Mississippi and other powers.

Powers can be discretionary or mandatory, depending on the specific terms of the trust or laws.

A trustee violates discretionary powers under the following examples:

• Making distributions to his or herself as a beneficiary without making same to other beneficiaries.
• If a beneficiary if the maker’s spouse, as support, and the maker is still alive, the resources of the spouse shall be considered in making disbursements to such spouse.

The Chancery court has no jurisdiction to review a discretionary disbursement, or force a disbursement, by a trustee except the following: A court may review a trustee’s distribution discretion only if the trustee acts dishonestly, acts with an improper motive, or fails to act, if under a duty to do so.  Except as may be otherwise provided for disbursements, whether a disbursement was reasonable does not apply to discretionary disbursements.

Unless there are provisions in the trust to the contrary, if distribution provisions in a discretionary interest 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 (1) beneficiary in the trustee’s discretion. This needs to be clear in the trust, not inconsistent with the trust provisions and part of discretionary provisions.

Select other provisions of discretionary disbursements are below:

(b) The following provisions apply only to discretionary interests:

(1) A discretionary interest is neither a property interest nor an enforceable right; it is a mere expectancy;

(2) A court may review a trustee’s distribution discretion only if the trustee acts dishonestly, acts with an improper motive, or fails to act, if under a duty to do so;

(3) A reasonableness standard shall not be applied to the exercise of discretion by the trustee with regard to a discretionary interest;

(4) Other than for the three (3) circumstances listed in subsection (b)(2), a court has no jurisdiction to review the trustee’s discretion or to force a distribution; and

(5) Absent express language in the trust instrument to the contrary, if the distribution language in a discretionary interest 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 (1) beneficiary in the trustee’s discretion.

(c) The following provisions apply only to mandatory or support interests:

(1) A beneficiary of a mandatory or a support interest has an enforceable right to a distribution pursuant to a court’s review;
(2) A trustee’s distribution decision may be reviewed for unreasonableness, dishonesty, improper motivation, or failure to act, if under a duty to do so; and
(3) In the case of a support interest, nothing in this section shall raise a beneficiary’s support interest to the level of a property interest.

(d) Unless otherwise provided in subsection (f), and unless the terms of the trust expressly indicate that a rule in this subsection does not apply:

          (1) A person other than a settlor who is a beneficiary and trustee of a trust that confers on the trustee a power to make discretionary distributions to or for the trustee’s personal benefit may exercise the power only in accordance with an ascertainable standard; and
(2) A trustee may not exercise a power to make discretionary distributions to satisfy a legal obligation of support that the trustee personally owes another person.

(e) A power that is limited or prohibited by subsection (d) may be exercised by a majority of the remaining trustees whose exercise of the power is not so limited or prohibited. If the power of all trustees is so limited or prohibited, the court may appoint a special fiduciary with authority to exercise the power.

(f) Subsection (d) shall not apply to:

          (1) A power held by the settlor’s spouse who is the trustee of a trust for which a marital deduction, as defined in Section 2056(b)(5) or 2523(e) of the Internal Revenue Code, was previously allowed;
(2) Any trust during any period that the trust may be revoked or amended by its settlor; or
(3) A trust if contributions to the trust qualify for the annual exclusion under Section 2503(c) of the Internal Revenue Code.