Maine Revised Statutes Title 18-C Sec. 7-406 – Judicial review of discretionary powers
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1. Court determination of abuse of fiduciary‘s discretion. A court may not change a fiduciary‘s decision to exercise or not to exercise a discretionary power conferred by this Part unless it determines that the decision was an abuse of the fiduciary’s discretion. A court may not determine that a fiduciary abused the fiduciary’s discretion merely because the court would have exercised the discretion in a different manner or would not have exercised the discretion.
[PL 2017, c. 402, Pt. A, §2 (NEW); PL 2019, c. 417, Pt. B, §14 (AFF).]
Terms Used In Maine Revised Statutes Title 18-C Sec. 7-406
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Beneficiary: includes , in the case of a decedent's estate, an heir and devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary. See Maine Revised Statutes Title 18-C Sec. 7-402
- Fiduciary: A trustee, executor, or administrator.
- Fiduciary: includes an executor, administrator, successor personal representative, special administrator and a person performing substantially the same function. See Maine Revised Statutes Title 18-C Sec. 7-402
- Income: includes a portion of receipts from a sale, exchange or liquidation of a principal asset, to the extent provided in subpart 4. See Maine Revised Statutes Title 18-C Sec. 7-402
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
2. Abuse of discretion; remedy. If a court determines that a fiduciary has abused the fiduciary’s discretion in exercising a discretionary power conferred by this Part, the remedy is to restore the income and remainder beneficiaries to the positions they would have occupied if the fiduciary had not abused the fiduciary’s discretion, according to the provisions of this subsection:
A. 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 the beneficiary’s appropriate position; [PL 2017, c. 402, Pt. A, §2 (NEW); PL 2019, c. 417, Pt. B, §14 (AFF).]
B. 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 or 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 or that beneficiary’s estate to return some or all of the distribution to the trust, notwithstanding a spendthrift or similar provision; [PL 2017, c. 402, Pt. A, §2 (NEW); PL 2019, c. 417, Pt. B, §14 (AFF).]
C. If the abuse of discretion concerns the power to convert a trust into a unitrust, the court shall require the trustee either to convert the trust to a unitrust or to reconvert from a unitrust; and [PL 2017, c. 402, Pt. A, §2 (NEW); PL 2019, c. 417, Pt. B, §14 (AFF).]
D. To the extent that the court is unable, after applying paragraphs A, B and C, to restore the beneficiaries or the trust, or both, to the positions they would have occupied if the fiduciary had not abused the fiduciary’s discretion, the court may require the fiduciary to pay an appropriate amount from the fiduciary’s own funds to one or more of the beneficiaries or the trust, or both. [PL 2017, c. 402, Pt. A, §2 (NEW); PL 2019, c. 417, Pt. B, §14 (AFF).]
[PL 2017, c. 402, Pt. A, §2 (NEW); PL 2019, c. 417, Pt. B, §14 (AFF).]
3. Proposed exercise or nonexercise of discretion; court determination. Upon a petition by the fiduciary, a court having jurisdiction over the trust or estate shall determine whether a proposed exercise or nonexercise by the fiduciary of a discretionary power conferred by this Part 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.
[PL 2017, c. 402, Pt. A, §2 (NEW); PL 2019, c. 417, Pt. B, §14 (AFF).]
SECTION HISTORY
PL 2017, c. 402, Pt. A, §2 (NEW). PL 2017, c. 402, Pt. F, §1 (AFF). PL 2019, c. 417, Pt. B, §14 (AFF).