Trust Distributions

General Rule

Trustee has an absolute and unqualified duty to pay the correct beneficiary.

Exception -- § 114.004

A trustee is not personally liable for a mistake of fact regarding a distribution which is made before the trustee has:

Actual knowledge, or

Written notice.

Trustee must seek return of improperly distributed property.

To whom should trustee distribute?

1. As settlor directed in the trust.

To whom should trustee distribute?

2. If beneficiary is a competent adult:

To beneficiary Unless trust provides otherwise

To whom should trustee distribute?

3. Beneficiaries with reduced capacity – § 113.021. Who?

Minors

Person who in judgment of trustee is incapacitated.▪ Note: Judicial or medical determination

not needed.

To whom should trustee distribute?

3. Beneficiaries with reduced capacity -- § 113.021. Distribution options: Beneficiary Guardian of person or estate Directly for HEMS Custodian (TUTMA) Reimburse person caring for

beneficiary Manage as separate fund on B’s

behalf subject to B’s right to withdraw

To whom should trustee distribute?

4. May trustee deviate from settlor’s instructions? General rule = no Seek court permission under §

112.054.