What is a trust?
A trust is effectively an obligation imposed on a person (the trustee) to hold property or income for the benefit of others (the beneficiaries).
The trustee is responsible for the operation of the trust. A trustee can be one or more individual(s), or a company. There are a number of laws which govern how a trustee must perform his or her obligations to the trust. The primary obligation of a trustee is to act in the best interests of the beneficiaries of the trust.
Types of Trusts
The most common trusts that arise in estate planning and disputes are testamentary trusts and discretionary trusts (or family trust):
- The trustees of a discretionary trust are usually able to income and capital gains to beneficiaries in whatever way they desire, and there is no fixed entitlement for each and every beneficiary.
- A testamentary trust is any trust established under a will, but the term is usually used in the context of a discretionary family trust established under a will.
If a trustee has breached their obligations, an application may be made to the Supreme Court to remove and replace the trustee.
Some examples of situations in which a trustee may be removed include for breach of trust, where the trustee has purchased part of the estate, where the trustee has resided abroad permanently, where the trustee has become bankrupt and in the administration of the trust has to receive and deal with money, where the trustee is not impartial and when the court is satisfied that the trustee property would not be safe in the trustee’s hands.
Douglas Cheveralls Lawyers may provide advice to a beneficiary who wishes to make a claim against the trustee.
If a trustee is unsure about how to perform their obligations, the trustee may apply to the Supreme Court for direction about what steps to take (known as an application for judicial advice, or a “Beddoe Order”).
Douglas Cheveralls Lawyers has acted for trustees in these types of applications, and may provide advice to a trustee about how to properly perform their duties.