Can you make yourself sole beneficiary in a discretionary trust ?

[richard56]

Hi
Yes or no?
Richard

[Anthonyacat]

Yes.
Anthony

[Davo36]

What's a discretionary trust?

When we set up our family trust we were told we couldn't be the trustees, setllors and beneficiaries because it would be considered a sham trust.

[Anthonyacat]

Discretionary trust is what most trusts are, where the beneficiaries are decided. As opposed to Unit Trusts, such as the AECT or a charity.

As for ideas of a sham trust, totally true. Not advised to set same beneficiaries trustees etc. but of course you can do it. That's all he asked.

Disclosure: Accountant, not lawyer. Deal with trusts regularly, but never made one.

[Perry]

What's a discretionary trust?

As I understand it, any distribution from the Trust to beneficiaries is
at the discretion of the Trustees - hence the name.

A Will says so-and-so beneficiary gets a bequest and it's quite an
expensive struggle to amend that.

A Trust Deed says here's a list of beneficiaries to whom the Trustees
may give Trust property, at their discretion.

If a Will named Cheap Chump as a beneficiary to receive $50k and
Cheap Chump was in jail for 20 years for drug trafficking, the $50k
would be paid to Cheap Chump and be promptly appropriated by
the State - because the executors had no discretion.

If a Trust Deed named Cheap Chump as a discretionary beneficiary
and the Trustees had $50k to distribute and Cheap Chump was in
jail for 20 years for drug trafficking, the Trustees could exercise
their discretion and not pay $50k to Cheap Chump because of his
circumstances - because the Trustees have that discretion.

In that case, the Trustees might apply the $50k to the health and
welfare of his spouse and/or kids, if the Trust Deed allowed that.

That's a lay person's perspective which our helpful legal beagles
may wish to qualify.

[eri]

you can put in who you like

and then just fire them on your say so

but it appears the courts can tear that up

if it's challenged

For one of the trusts in this particular dispute, Mark Clayton had the right to remove discretionary beneficiaries and therefore leave himself as the sole person entitled to receive income and capital from it.

After deciding such a power of appointment could be property and therefore relationship property, Justices Ellen France, Tony Randerson and Douglas White said its value was the net value of the trust's assets.

LeeSalmonLong partner Isaac Hikaka said the decision was the first with such a clear statement that this is a particular power that is an item of relationship property and that it has a specific value.

"So it's likely to have widespread effect not just on relationship property law but also the way in which trusts are framed going forward," Hikaka said.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11412499

[spaceman]

What's a discretionary trust?

When we set up our family trust we were told we couldn't be the trustees, setllors and beneficiaries because it would be considered a sham trust.

That advice was incorrect ....I hope you didn't pay for it.

I liked the books by Ross Holmes....If you've got a trust and still taking the same persons advice I say a read of them would just about be compulsory



Cheers
Spaceman

[xsfat]

Can you make yourself sole beneficiary in a discretionary trust ?

A trustee can not be the sole beneficiary of a trust. This is because when the legal and equitable (or beneficial) interests in the trust property reside in the same person, there can be no trust.

[richard56]

A trustee can not be the sole beneficiary of a trust. This is because when the legal and equitable (or beneficial) interests in the trust property reside in the same person, there can be no trust.

Hi
OK so now we have one vote yes and one vote no....any more?
Richard

[Anthonyacat]

A trustee can not be the sole beneficiary of a trust. This is because when the legal and equitable (or beneficial) interests in the trust property reside in the same person, there can be no trust.

I'm quite certain a trustee can be the sole beneficiary, so long as they aren't the sole trustee. There was no mention in the initial question that this trust has only one trustee.

[Cpt707]

Hi richard56....Check out Ross Holmes lawyer' website. He offers a 30 min no obligation chat about your Trust. Ensure your 'mandarin and cantonese' is OK. Remember to much stress is dangerous !! Chris

[spaceman]

A trustee can not be the sole beneficiary of a trust. This is because when the legal and equitable (or beneficial) interests in the trust property reside in the same person, there can be no trust.

?? Oh really???

Lets say you have no friends or family and you want to start a business. You've been told that a trust is a good idea for asset protection in case your business venture goes wrong. Who would you suggest the beneficiary of the trust be???

Cheers
Spaceman

[Ivan McIntosh]

As I understand it, any distribution from the Trust to beneficiaries is
at the discretion of the Trustees - hence the name.

A Will says so-and-so beneficiary gets a bequest and it's quite an
expensive struggle to amend that.

A Trust Deed says here's a list of beneficiaries to whom the Trustees
may give Trust property, at their discretion.

If a Will named Cheap Chump as a beneficiary to receive $50k and
Cheap Chump was in jail for 20 years for drug trafficking, the $50k
would be paid to Cheap Chump and be promptly appropriated by
the State - because the executors had no discretion.

If a Trust Deed named Cheap Chump as a discretionary beneficiary
and the Trustees had $50k to distribute and Cheap Chump was in
jail for 20 years for drug trafficking, the Trustees could exercise
their discretion and not pay $50k to Cheap Chump because of his
circumstances - because the Trustees have that discretion.

In that case, the Trustees might apply the $50k to the health and
welfare of his spouse and/or kids, if the Trust Deed allowed that.

That's a lay person's perspective which our helpful legal beagles
may wish to qualify.

In summary, quite right Perry. Anthony, your post wasn't correct, sorry.

Sure, you could in theory have a discretionary trust where you are the sole beneficiary but I think it a bad idea that invites challenge. As Davo was advised, it's a good idea to have a range of separate people involved to show at least some degree of independent thought and a rnage of beneficiaries to which that thought can be applied. You really are vulnerable, in a one person does everything scenario, to have some judge look at it and judge that in reality it is just you as you are the only person that distributions can be made to. Which would in my view be the way courts ought to rule, regardless of whether they are or aren't.

[Ivan McIntosh]

?? Oh really???

Lets say you have no friends or family and you want to start a business. You've been told that a trust is a good idea for asset protection in case your business venture goes wrong. Who would you suggest the beneficiary of the trust be???

Cheers
Spaceman

Yourself, future spouse and children, another trust, an estate such as your parents estates if they are still in existence, charities, distance nephews, nieces....no one is completely wihout family if they range wide enough.

[spaceman]

^ Tsk tsk ....bad lawyer

Lets say you have no friends or family

....estate such as your parents,

Do have a lawyer question for you though.

If a trust is set up with you and future people (spouse/kids) as beneficiaries and those future people don't exist yet does the trust have a sole beneficiary???

Cheers
Spaceman