The person who sets up a trust appoints one or more trustees to manage the trust assets for the benefit of the trust’s beneficiaries. According to California Probate Code §16000, trustees have a legal obligation to follow the instructions outlined in the trust instrument when administering the trust. As part of this duty, trustees must distribute money and other assets to beneficiaries according to the directives of the trust document.

0:00 Introduction
0:01 What Happens If a Trustee Refuses to Give a Beneficiary Money?
1:32 Can a trustee refuse to pay a beneficiary?
3:07 When can a beneficiary sue a trustee?
4:46 When should I contact a trust litigation attorney?

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Trustees need to thoroughly review the trust instructions to determine when distributions should or need to take place and how much money each beneficiary should receive. The requirements will vary widely among trusts, so we recommend that trustees review and discuss the terms of the instrument with a knowledgeable trust lawyer to ensure they comply.

Sometimes, a beneficiary demands money a trustee is not permitted to distribute from the trust. Other times, however, trustees refuse to give a beneficiary money they are entitled to or the trustee has the discretion to distribute. In the first case, the failure to distribute likely would be a breach. In the second, case the failure to distribute might be a breach, depending on the nature of the discretion given to the trustee – e.g. discretion, sole discretion, or sole and absolute discretion. If a trustee is refusing to distribute funds or a beneficiary is demanding distributions a trustee is unsure should be made, trust dispute counsel should be consulted.

Can a trustee refuse to pay a beneficiary?
Yes, a trustee can refuse to pay a beneficiary if the trust allows them to do so.

Whether a trustee can refuse to pay a beneficiary depends on how the trust document is written. Trustees are legally obligated to comply with the terms of the trust when distributing assets. Some trusts give trustees considerable discretion to determine when to make distributions and how much to distribute. In most cases, trustees with this level of authority would be able to refuse to pay a beneficiary if they reasonably believed the request was unreasonable.

Other trusts place restrictions on when trustees can make distributions, such as the beneficiary satisfying certain conditions or reaching a particular age. If a beneficiary demands a distribution when the trust instructions preclude it, the trustee must refuse to pay the beneficiary.

However, if the trustee’s refusal to pay a beneficiary is not allowed or justified by the trust’s instructions, beneficiaries have legal options. They may be able to pursue a lawsuit for breach of fiduciary duty, petition to instruct the trustee to make the requested distribution, or petition the court to have the trustee removed. Often we hear that a trust does not have sufficient assets to make a requested distribution, in which case it may be necessary to ask the trustee to provide an accounting report to the trust beneficiaries, either informally or formally through the courts.

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RMO LLP serves clients in Los Angeles, Santa Monica, Orange County, San Diego, Kansas City, Miami, and communities throughout California, Florida, Missouri and Kansas.

Our founder, Scott E. Rahn has been named “Top 100 – Trust and Estate Litigation” by SuperLawyers, Trusts and Estates Litigator of the Year, and Best Lawyers in America for Litigation