2023 New York Laws › EPT - Estates, Powers and Trusts › Article 11 - Fiduciary: Powers, Duties and Limitations; Actions by or Against in Representative or Individual Capacities › Part 2 - Investments by Fiduciaries: Powers and Duties Relating Thereto › 11-2.3-A - Judicial Control With Respect to Fiduciary's Power to Adjust

§ 11-2.3-A Judicial control with respect to fiduciary's power to adjust
(a) Judicial control of adjustment power.
A  court shall not change a fiduciary's decision to exercise or not to
exercise an adjustment  power  conferred  by  subparagraph  11-2.3(b)(5)
unless  it  determines that the decision was an abuse of the fiduciary's
discretion. A court shall not determine that a fiduciary abused his, her
or its discretion merely because the  court  would  have  exercised  the
discretion  in  a  different  manner  or  would  not  have exercised the
discretion.
(b) Applicable decisions.
The decisions to which paragraph (a) applies include:
(1) A determination under subparagraph 11-2.3(b)(5) of whether and  to
what  extent an amount should be transferred from principal to income or
from income to principal.
(2) A determination of the factors that are relevant to the trust  and
its  beneficiaries,  the  extent  to  which  they  are relevant, and the
weight, if any, to be given to the relevant factors, in deciding whether
and to what extent to  exercise  the  power  conferred  by  subparagraph
11-2.3(b)(5).
(c) Authorization for court to remedy abuse of discretion.
If  a  court  determines  that  a fiduciary has abused his, her or its
discretion, the court may restore the income and remainder beneficiaries
to the positions they would have  occupied  if  the  fiduciary  had  not
abused his, her or its discretion, according to the following rules:
(1)  To  the  extent  that  the abuse of discretion has resulted in no
distribution to a beneficiary or a distribution that is too  small,  the
court  shall  require  the fiduciary to distribute from the trust to the
beneficiary an  amount  that  the  court  determines  will  restore  the
beneficiary, in whole or in part, to his or her appropriate position.
(2)  To  the  extent  that  the  abuse of discretion has resulted in a
distribution to a beneficiary that is too large, the court shall restore
the beneficiaries, the trust, or both, in whole or  in  part,  to  their
appropriate  positions  by requiring the fiduciary to withhold an amount
from one or more future distributions to the  beneficiary  who  received
the  distribution  that  was  too large or requiring that beneficiary to
return some or all of the distribution to the trust.
(3)  To  the  extent  that  the  court  is  unable,   after   applying
subparagraphs  (1)  and (2), to restore the beneficiaries, the trust, or
both, to the positions they would have occupied if the fiduciary had not
abused his, her or its discretion, and  if  the  court  finds  that  the
fiduciary  was  dishonest or arbitrary and capricious in the exercise of
his, her or its discretion, the court may require the fiduciary  to  pay
an  appropriate  amount from his, her or its own funds to one or more of
the beneficiaries or the trust or both.
(d) Petition by fiduciary.
Upon a petition by a  fiduciary  who  is  authorized  to  exercise  an
adjustment  power  conferred  by  subparagraph  11-2.3 (b)(5), the court
having jurisdiction over the trust or estate  may  determine  whether  a
proposed  exercise  or  nonexercise  by  the fiduciary of the adjustment
power will result in an abuse of  the  fiduciary's  discretion.  If  the
petition describes the proposed exercise or nonexercise of the power and
contains  sufficient  information  to  inform  the  beneficiaries of the
reasons for the proposal, the facts upon which the fiduciary relies, and
an explanation of how the income and  remainder  beneficiaries  will  be
affected  by  the  proposed  exercise  or  nonexercise  of  the power, a
beneficiary who challenges the proposed exercise or nonexercise has  the
burden of establishing that it will result in an abuse of discretion.