Key point. The decisions of trustees regarding the distribution of trust income or principal ordinarily will be upheld by the courts, especially where the trust confers upon them the sole discretion to make such decisions and they act in good faith.
* A California court ruled that a trust that was created by a church member to benefit elderly members of the church did not act improperly in rejecting a request by the church to distribute $300,000. A church member (Ruth) created a trust that directed the trustees to pay her church so much of the income and principal "as is necessary for the benefit of senior citizens, whether to improve the church for their comfort, or to assist programs started through the church for the benefit of senior citizens, or for such other needs of the church as the trustees shall, in their sole discretion, determine. At the time of Ruth's death, the trust was valued at more than $1 million. The trust named two individuals to serve as co-trustees.
The church asked the trustees to distribute $300,000 from the principal of the trust to help pay the cost of a $3 million remodeling project that had gone several hundred thousand dollars over budget. The church claimed that it would use the $300,000 in accordance with the terms of the trust by paying for things that benefited seniors, such as benches in the reception area and more comfortable seating in the church, a new sound system, brighter lighting, better heating and air conditioning, and a new drive-through area to give seniors better access. However, the church did not give the trustees a breakdown of how the church intended to spend the $300,000. The trustees rejected the church's request because they believed that it was inconsistent with Ruth's intent in creating the trust.