Tuesday, April 4, 2017

The trust beneficiary, there never was

As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers the above mentioned topic in a ‘vidcast’ at the following link - https://youtu.be/_ZcDIESeE5A

As usual, an edited transcript of the presentation for those that cannot (or choose not) to view it is below –

The case study that we will explore here involved a husband who was breaking up with his spouse.

The husband had been the sole trustee of the relevant trust from day one. We'll call him Mr Y. Mr Y was also the primary beneficiary of the trust.

The wife was trying to argue that Mr Y had received distributions overtime and therefore she was entitled to percentage share of the trust.

So a fairly standard analysis of a family trust in a family law dispute. We were called in because the wife’s lawyer had the hide to actually read the trust deed.

The trust instrument stated that in relation to the definition of primary beneficiary, in no circumstances could a primary beneficiary receive distributions, if at any time the person was a trustee.

So from day one, the provisions of the deed had meant that Mr Y was never in fact a potential beneficiary of the trust and yet he had received significant distributions over an extended period of time. A fundamental issue triggered simply because no one had actually read the trust deed.

Interestingly, this type of exclusion of beneficiary class is in virtually every trust instrument from a New South Wales trust deed provider. More problematically, this type of provision is actually used by countless other deed providers as well, whether they're based in New South Wales exclusively or whether they in fact are based in other parts of the country.

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