Legal Question in Wills and Trusts in Illinois
scholarship trust
My deceased father' trust provides
scholarships. Annual
scholarships can't be
more than 8% of previous year
ending corpus. Current year income
is defined as dividends,
interest + gains. Since
stock prices went down last two
years, bank has
not paid out any scholarships,
rationalizing that reduction in
share prices should be
netted against annual dividends,
interest and gains, rendering
annual ''income'' as
negative, so no money paid out.
Economy is poor. Local students
that Dad
intended to benefit are getting
nothing. I am trustee for my father's
estate and think the
family are the most logical ones to
interpret Dad's will, if not adequately
described in the
trust document.
For example, if beginning corpus is
100, current dividends, interest and
gains are 10, but the
share market price goes down to 90,
then the trust should be allowed to
distribute 8 (8% of
the 100 beginning corpus). The
theory taken by the bank is that 10
income should have the
10 share price reduction netted
against it -- resulting in 0, so no
scholarships awarded. This
maximizes ongoing trust balance
managed by the bank and
consequently their fees. What is the
law on this?
1 Answer from Attorneys
Re: scholarship trust
The trustee decisions about how to interpret the terms of the trust. The trustee has a duty to act in the best interests of the beneficiaries of the trust and to honor the terms of the agreement. You have a few options: (1) You can get a court order telling the bank what to do; (2) You can try to get a new bank to administer the trust, which may also require court action (could be tricky depending on terms of the trust); (3) You can see if there is an appeals process within the bank itself.
Please feel free to give us a call if you want to talk.
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