## Facts

- Marie H. created a revocable trust that, at her death, divided her estate into two equal shares, including a discretionary trust for her severely disabled son, Mark C. H.
- Mark had severe autism, was nonverbal, and lived in a residential institution; the trust was funded with several million dollars.
- The trust gave cotrustees JP Morgan Chase Bank, N.A. and H.J.P. “absolute discretion” to distribute income and principal for Mark’s “care, comfort, support and maintenance.”
- After Marie’s death in March 2005, for several years the cotrustees did not visit Mark, contact his institution to learn his condition or needs, or spend trust funds for his benefit.
- During a later guardianship proceeding, it became apparent the cotrustees had little understanding of Mark’s circumstances despite their fiduciary roles.
- The court, on its own motion, directed the trustees to ascertain Mark’s needs, investigate available services, and use trust income to provide appropriate services.
- After court intervention, the trustees retained a certified care manager and began funding services that substantially improved Mark’s quality of life.

## Issues

1. Whether trustees of a discretionary-support trust for a disabled beneficiary have an affirmative duty to investigate and provide for the beneficiary’s needs rather than passively relying on public benefits.
2. Whether years of failing to visit, inquire, or expend trust funds for the beneficiary constitutes a breach of fiduciary duty.
3. What court directions and remedies are appropriate in an accounting proceeding to address and prevent such fiduciary failures.

## Decision

- The court held that trustees of a discretionary-support trust for a disabled beneficiary must affirmatively and continuously inquire into the beneficiary’s condition and needs and apply trust assets to improve the beneficiary’s quality of life consistent with the settlor’s intent.
- The court ruled that broad or “absolute” discretion concerns how trustees make distributions and does not excuse failure to exercise judgment; prolonged inaction and noninquiry constitutes a fiduciary breach.
- The court found the cotrustees’ earlier course of conduct fell below fiduciary standards, emphasizing the trustee’s duty of complete loyalty to a vulnerable beneficiary.
- The court used the accounting proceeding to issue specific directions and broader guidance for fiduciaries administering similar trusts, warning that future failures may warrant available breach remedies.

## Legal Principles

- A trustee owes a duty of loyalty and prudent administration that requires active attention to a disabled beneficiary who cannot self-advocate.
- Discretionary distribution authority must be exercised; failing to investigate needs or consider distributions is a failure to exercise discretion and may constitute breach.
- Trustees must monitor the beneficiary’s circumstances, communicate with caregivers and institutions, and remain informed about changing medical and support needs.
- Public benefits are not a substitute for trust performance; discretionary-support trusts are generally expected to supplement baseline public programs to advance the beneficiary’s welfare.

## Conclusion

The court held that cotrustees administering a multimillion-dollar discretionary-support trust for a severely disabled beneficiary had an affirmative duty to investigate the beneficiary’s needs and use trust assets for his welfare, and that years of passivity and nonexpenditure constituted a breach of fiduciary obligations warranting judicial direction and potential remedies in the accounting.


In re JP Morgan Chase Bank, N.A. (Marie H.), 38 Misc. 3d 363, 956 N.Y.S.2d 856 (Sur. Ct. N.Y. Cnty. 2012)