Trustee's liability?

What is the name of your state (only U.S. law)? CA

My mother passed away recently (my father passed away years ago) and had a trust but no will. The trust calls for a sub-trust to be established for two (adult) siblings but, of course, these two beneficiaries are pining for a lumpsum distribution like everyone else. As trustee, is it my fiduciary to carry out the trust as stated or is it at my discretion to form or not form a subtrust? Is this a matter of ethics rather than law?

Here's the exact wording of the subtrust section:

"Until a child's subtrust ends, the trustee may distribute to or use for the benefit of the beneficiary as much of the net income or principal of the child's subtrust as the trustee deems necessary for the beneficiary's health, support, maintenance or education. Education includes, but is not limited to, college, graduate, postgraduate and vocational studies, and reasonably related living expenses. In deciding whether to make a distribution to the beneficiary, the trustee may take into account the beneficiary's other income, resources and sources of support. Any subtrust income that is not distributed to a beneficiary by the trustee shall be accumulated and added to the principal of the subtrust for that beneficiary. The trustee of a child's subtrust is not required to make any accounting or report to the subtrust beneficiary."

As for the trust itself, there is language giving the trustee full discretion in distribution similar to the language above.

Is there any sort of waiver or release they can sign to protect me from future legal actions resulting from the lumpsum distribution?

How old are the beneficiaries? Are there any real reasons not to distribute the trust assets?

The trust wording, "Until a child's subtrust ends,......". Are there instructions concerning the ending of the trust?

All beneficiaries are adults. Not sure why "child" was used ... perhaps artifact of a template. The two named under the subtrust are floundering -- no career, no savings, getting along in age (45+) -- so my Mom and Dad wanted to make sure they have something to lean back on and not squander.

The subtrust ends when:

1. The beneficiary dies. If the subtrust ends for this reason, the subtrust property shall pass to the beneficiary's heirs.
2. The trustee distributes all subtrust property under the provisions of this Declaration of Trust.

The trust itself ends when:

Unless sooner terminated in accordance with other provisions of this instrument, each trust created hereunder, shall terminate and the principal and undistributed income of such trust shall be distributed to the current beneficiaries thereof in proportion to their interest therein at that time upon the first to occur of the following events: (a) Whenever the value of the principle and accrued and undistributed income of each such trust shall be less than Ten Thousand ($10,000.00) if the Trustee then elect to terminate the trust; or (b) One (1) day prior to the twenty-first (21st) anniversary of the death of the last survivor of the Trustor.

The two named under the subtrust are floundering -- no career, no savings, getting along in age (45+) -- so my Mom and Dad wanted to make sure they have something to lean back on and not squander.

How is the discussion going with the two? Civil? Do they fully understand the reasoning of mom and dad? How much is left in the subtrust? What is the reason for the "floundering"? Are there drugs involved ? I would suggest you would be straight forward with them and ask for their plan for the additional money. Then perhaps distribute according to their plan. Put the responsibility into their court.

Discussion going ok but can get heated. Of course, the two named beneficiaries pull the it's-my-life card.
No drugs involved ... just stupidity or lack of judgement. However, isn't that the whole point of the subtrust -- to protect them from themselves?

Therefore, how do I protect myself from future legal actions resulting from the lumpsum distribution?

The language gives you enough latitude to wash your hands of the subtrust without a problem. If you still feel uncomfortable, run it by an attorney for $100.

It says, "may distribute to or use for the benefit of the beneficiary as much of the net income or principal of the child's subtrust as the trustee deems necessary for the beneficiary's health, support, maintenance or education."

You might even suggest a two or three year distribution.