Oklahoma § 60-175.89 - Applicable trust provisions for beneficiaries holding

§ 60-175.89. Applicable trust provisions for beneficiaries holding

discretionary interests.

The following provisions apply only to trusts with one or more

beneficiaries holding discretionary interests:

1. A discretionary interest is neither a property interest nor

an enforceable right to a distribution; it is a mere expectancy;

provided, however, a beneficiary holding a discretionary interest

has an equitable interest to bring an action against the trustee

within the judicial review standard of paragraph 4 of this section.

No creditor, regardless of whether the Oklahoma Discretionary and

Special Needs Trust Act provides for any exception creditors, shall

attach, require the trustee to exercise the trustee’s discretion to

make a distribution, or cause a court to judicially sell a

discretionary interest;

2. Regardless of whether a beneficiary has any outstanding

creditor, a trustee may directly pay any expense on behalf of the

beneficiary and may exhaust the income and principal of the trust

for the benefit of the beneficiary. A trustee shall not be liable

to any creditor or beneficiary for paying the expenses of a

beneficiary;

3. A creditor, including an exception creditor, of a

beneficiary has no greater rights in a discretionary interest than a

beneficiary, and shall not compel a distribution that is subject to

the discretion of the trustee, nor may a court order a distribution;

Oklahoma Statutes - Title 60. Property

4. A court may review a distribution discretion of a trustee

only if it is proved by clear and convincing evidence that the

trustee:

a.

acts dishonestly,

b.

acts with an improper motive, or

c.

fails to act.

The sole factor not to make a distribution does not constitute a

failure to act. There is no standard of reasonableness under the

above review standard;

5. In addition to any limitations of rights of creditors, if

the trust contains a spendthrift provision, a current interest in a

discretionary trust also receives the benefits of any spendthrift

protection; and

6. Absent express language to the contrary, in the event that

the distribution language 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 beneficiary in

the discretion of the trustee.

Added by Laws 2010, c. 280, § 9, eff. Nov. 1, 2010.