Indiana § 30-2-14-17 - Discretionary powers of fiduciary; failure to exercise power; remedies

§ 30-2-14-17. Discretionary powers of fiduciary; failure to exercise power; remedies

Sec. 17. (a) A court shall not change a fiduciary's decision to exercise or not to exercise a discretionary power conferred by this chapter unless it determines that the decision was an abuse of the fiduciary's discretion. A court shall not determine that a fiduciary abused its discretion merely because the court would have exercised the discretion in a different manner or would not have exercised the discretion.

(b) The decisions to which subsection (a) applies include the following:

(1) A determination under section 15(a) of this chapter of whether and to what extent an amount should be transferred from principal to income or from income to principal.

(2) In deciding whether and to what extent to exercise the power conferred by section 15(a) of this chapter, a determination of the following:

(A) The factors that are relevant to the trust and the trust's beneficiaries.

(B) The extent to which the factors are relevant.

(C) The weight, if any, to be given to the relevant factors.

(c) If a court determines that a fiduciary has abused the fiduciary's discretion, the remedy shall be to restore the income and remainder beneficiaries to the positions they would have occupied if the fiduciary had not abused the fiduciary's discretion, subject to the following:

(1) To the extent that the abuse of discretion has resulted in no distribution to a beneficiary or a distribution that is too small, the court shall require the fiduciary to distribute to the beneficiary an amount that the court determines will restore the beneficiaries, in whole or in part, to their appropriate positions.

(2) To the extent that the abuse of discretion has resulted in a distribution to a beneficiary that is too large, the court shall restore the beneficiaries, in whole or in part, to their appropriate positions by requiring:

(A) the fiduciary to withhold an amount from at least one (1) future distribution to that beneficiary; or

(B) the beneficiary to return some or all of the distribution to the trust.

(3) To the extent the court is unable, after applying subdivisions (1) and (2), to restore the beneficiaries to the positions they would have occupied if the fiduciary had not abused the fiduciary's discretion, the court shall require the fiduciary to pay an appropriate amount to:

(A) at least one (1) of the beneficiaries;

(B) the trust; or

(C) entities under both clauses (A) and (B).

(d) Upon a petition by the fiduciary, the court having jurisdiction over the trust or estate shall determine whether a proposed exercise or nonexercise of a discretionary power by the fiduciary will result in an abuse of the fiduciary's discretion. The petition shall:

(1) describe the proposed exercise or nonexercise of the power;

(2) contain sufficient information to inform the beneficiaries of:

(A) the reasons for the proposal; and

(B) the facts upon which the fiduciary relies; and

(3) contain an explanation of how the income and remainder beneficiaries will be affected by the proposed exercise or nonexercise of the power.

(e) A beneficiary who challenges a fiduciary's proposed decision or actual decision to exercise or not to exercise a discretionary power conferred by this chapter shall have the burden of establishing that it will result or did result in an abuse of discretion.

As added by P.L.84-2002, SEC.2.