The 'S Trust' involves sole discretion; which statement is true about the trustee's discretionary powers?

• A. The trustee's discretion may be constrained by duties of good faith and purpose.
• B. The trustee may always override the trust instrument.
• C. The trustee must always invest in stocks.
• D. The trustee's discretion requires court approval for every distribution.

Answer: (A)

Discretion in a trust isn’t unlimited; the trustee must balance flexible decision-making with fiduciary duties. When a trustee has sole discretion, they still must act in good faith and in accordance with the trust’s purpose and terms. That means their choices about distributions are constrained by a duty to administer the trust for the benefit of the beneficiaries and to carry out the trust’s stated aims, rather than acting on personal whim. The interplay of discretion and these duties is what makes the statement true: the trustee’s power isn’t free to override the instrument or ignore its purpose.

This helps explain why the other ideas aren’t correct: a trustee cannot simply override the trust instrument by exercising discretion; investments aren’t necessarily required to be stocks—the investment approach depends on the trust terms and prudent investing standards; and court approval isn’t typically required for every distribution unless there’s a specific court mandate or a lack of capacity to act.