3.3.1 Settlor’s Intent

The non-modifiable Uniform Trust Code good faith standard, like the standard traditionally governing extended discretion under common law, is applied in a way to implement the settlor’s intent and to benefit the beneficiaries. As such, it implies the reasonable exercise of discretion. This mirrors the approach of the Restatement (Third):

§ 50.   Enforcement and Construction of Discretionary Interests

(1)               A discretionary power conferred upon the trustee to determine the benefits of a trust beneficiary is subject to judicial control only to prevent misinterpretation or abuse of the discretion by the trustee.

(2)               The benefits to which a beneficiary of a discretionary interest is entitled, and what may constitute an abuse of discretion by the trustee, depend on the terms of the discretion, including the proper construction of any accompanying standards, and on the settlor’s purposes in granting the discretionary power and in creating the trust.[1]