3.1.2 Settlor’s Intent

In some trusts, however, the settlor appears to grant discretion without any standard or measurement of the settlor’s intent.   In those cases, the settlor grants extended discretion (“absolute” or “unlimited” or “uncontrolled” discretion).   Extended discretion, according to the first two Restatements of Trusts, obviates the requirement that the trustee act reasonably:

The mere fact that that the trustee is given discretion does not authorize him to act beyond the bounds of a reasonable judgment.   The settlor, may, however, manifest an intention that the trustee’s judgment need not be exercised reasonably, even where there is a standard by which the reasonableness of the trustee’s conduct can be judged.   This may be indicated by a provision in the trust instrument that the trustee shall have “absolute” or “unlimited” or “uncontrolled” discretion.   These words are not interpreted literally but are ordinarily construed as merely dispensing with the standard of reasonableness.   In such a case the mere fact that the trustee has acted beyond the bounds of a reasonable judgment is not a sufficient ground for interposition by the court, so long as the trustee acts in a state of mind in which it was contemplated by the settlor that he would act.     But the court will interfere if the trustee acts in a state of mind not contemplated by the settlor.   Thus, the trustee will not be permitted to act dishonestly, or from some motive other than the accomplishment of the purposes of the trust, or ordinarily to act arbitrarily without an exercise of his judgment.[1]