Accounting Question (Estate Finance Family Tax Plan)

On September 1, 2012, Larry establishes and transfers $10 million to a trust with himself as trustee. Under the terms of the trust, Larry can make distributions of principal and income at his discretion to Jeff during Jeffs life to provide for Jeffs health, education, maintenance and support. Larry is given discretion to invest the trust assets in any manner. Upon Jeffs death, the remainder of the trust is distributed to Leon.

As of September 1, 2016, Larry has made no distributions to Jeff. Jeff is upset that he has received nothing and engages you as counsel. When you ask Larry why no distributions were made, Larry says that he has discretion whether to make distributions and he chose not to exercise that discretion.

Based on the information above, please answer the following questions:

• How would you advise Jeff to proceed?
• What would you want to know from Larry and Jeff?
• Do you think Jeff has a claim for breach against Larry?
• Analyze possible duties that Larry has breached.