Legal Question in Wills and Trusts in New Mexico
trust fund goof
Our church is the recipient of monies from a fund set up by a deceased person. The principle is to be continually invested and the church receive the quarterly earnings . It's being handled by a foundation. The foundation mistakenly issued a disbursement to our church which should have been invested as part of the principle. Now the foundation wants us to pay back the amount they mistakenlyi gave out. If we can't pay it back, they will reinvest the earnings on what's left of the principle until the amount is paid back. Can they do this legally?..when the will says that we should receive the earnings from the investment quarterly?
1 Answer from Attorneys
Re: trust fund goof
Not only can they, but they must in discharge of their fiduciary duties to the trust. The church was not entitled to the mistaken distribution of principle, so under what theory would the church lawfully and morally retain it? Think of the mistaken distribution as "earnings," and the foundation will rebuild the principle with what will become more principle. Unless this is done, the trust will not be able to maintain itself indefinitely as was the obvious intent of the settlor when s/he set it up in this fashion. Be grateful that you had such a generous benefactor, and do not attempt to take advantage of a situation which was not intended to occur.
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