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Can you challenge a discretionary trust?

On Behalf of | Nov 4, 2022 | Trust & Estate Litigation

One reason that people sometimes challenge trusts is when they believe that the trustee is not acting in accordance with the guidance given in that trust. For example, maybe an elderly person set up an educational trust and the trustee is not releasing the proper funds to pay for the beneficiary’s college tuition. This beneficiary could then challenge that trust on those grounds.

But a discretionary trust is a bit different, in that it just gives the trustee the ability to use their own discretion to decide how it is wise to use the money within that trust. Since they get to make these decisions, does that mean a beneficiary can’t challenge the trust?

There are still many reasons for a potential challenge

It is definitely possible to challenge a discretionary trust, and the first reason could be if you believe the trustee is simply not fulfilling their duties. Perhaps they’ve been using money from the trust personally or trying to transfer it into their own accounts. They’re clearly abusing their position because the money is supposed to only go to you, the beneficiary.

You may also be able to challenge the trust if you don’t believe that it was set up properly. For instance, maybe you think that the trustee used undue influence on your loved one before they wrote the trust, and that’s the only reason they were chosen as the trustee in the first place. This should never have been a discretionary trust to start with, but your loved one was manipulated. Once again, that could be a reason for a trust challenge.

These cases can get very complicated to sort out, and there may be a lot of money on the line, so be sure you know exactly what options you have.