91-9-507 - Trust monies designated for payments in trustee's discretion; restrictions and liability on payments to transferees or creditors; beneficiary's right to compel payments by trustee.
§ 91-9-507. Trust monies designated for payments in trustee's discretion; restrictions and liability on payments to transferees or creditors; beneficiary's right to compel payments by trustee.
(1) Except as provided in Section 91-9-509, if the trust instrument provides that the trustee shall pay to or for the benefit of a beneficiary so much of the income or principal or both of a trust as the trustee in the trustee's discretion sees fit to pay, a transferee or creditor of the beneficiary may not compel the trustee to pay any amount from the trust that may be paid only in the exercise of the trustee's discretion. This subsection shall not be applied or construed to limit or otherwise diminish a restraint on transfer that is valid under Section 91-9-503.
(2) If the trustee has knowledge of a transfer of a beneficiary's interest in a trust or has been served with process in a proceeding for garnishment or attachment or the like by a judgment creditor seeking to reach a beneficiary's interest in a trust, and the trustee pays to or for the benefit of the beneficiary any part of the income or principal of the trust that may be paid only in the exercise of the trustee's discretion, the trustee is liable to the transferee or creditor to the extent that the payment to or for the benefit of the beneficiary impairs the right of the transferee or creditor. This subsection does not apply if the beneficiary's interest in the trust is subject to a restraint on transfer that is valid under Section 91-9-503.
(3) This section applies regardless of whether the trust instrument provides a standard for the exercise of the trustee's discretion.
(4) Nothing in this section limits any right the beneficiary may have to compel the trustee to pay to or for the benefit of the beneficiary all or part of the income or principal of a trust.
Sources: Laws, 1998, ch. 460, § 4, eff from and after passage (approved March 23, 1998).