Section 506 - Overdue distribution1.Definitions. As used in this section, unless the context otherwise indicates, "mandatory distribution" means a distribution of income or principal that a trustee is required to make to a beneficiary under the terms of a trust, including a distribution upon termination of the trust. "Mandatory distribution" does not include a distribution subject to the exercise of the trustee's discretion even if:A. The discretion is expressed in the form of a standard of distribution; or [2011, c. 42, §6(NEW).]B. The terms of the trust authorizing a distribution couple language of discretion with language of direction. [2011, c. 42, §6(NEW).][2011, c. 42, §6(NEW).]
2.Unreasonable delay in distribution. Whether or not a trust contains a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date.[2011, c. 42, §6(NEW).]
Amended by 2011, c. 42,§ 6, eff. 9/28/2011.2003, c. 618, §A1 (NEW) . 2003, c. 618, §A2 (AFF) .