Rights of Beneficiaries

[captaincrab]

GF-regarding Trusts. Its very rare for a Beneficiary of a Trust to have any say. Usually they only become a Beneficiary with rights only after an event has triggered the Trust-like death. Trusts are controlled by the Settlors but administered by Trustees. That woman must have had the other Trustees (if any) go along.
To give you two examples. I am a beneficiary of my parenst Trust. Until they die, I can say or do nothing with the Trust.
On one of my Trusts I have the Auckland Zoo as a Beneficiary. I assure you Larry the Lion has no rights to my assets until I die!!!

[Green Fish]

As I recall, the beneficiaries have the "equitable interest" in the trust property, while the trustee has the "legal interest" (although I can't recall ever receiving any logical explanation as to what that actually meant).

The trustee is definitely liable to the beneficiaries for bad/wrong/negligent investment decisions. Although Captain Crab and the Auckland Zoo have no ability to direct the trustee, they retain the ability to claim compensation from the trustee for investment decisions made by the trustee.

In this case, an action against the trustee would be futile. The "little old lady" is definitely liable. She transferred her property to a trust, and then treated it as her own, when she was taken for a ride by a Blue Chip shyster. The point is that she should have realised that the property was not hers to deal with. She was a mere trustee of it. Yet she went ahead and mortgaged the trust property to the hilt, and it will now be sold via a mortgagee sale. The little old lady is definitely liable to the beneficiaries for the loss she has caused them.

Problem is: the little old lady can't pay a cent.

[captaincrab]

GF "The trustee is definitely liable to the beneficiaries for bad/wrong/negligent investment decisions"

No, They are not liable while my parents/me are still alive and are the Settlors.
This only applies once the Trust is put into play, ie after my parents die. And then the Trustee(s) are only bound by the terms of the trust. Until then I have no right.You're not drawing the distinction as to WHEN one becomes a beneficiary who can recieve benefit and being NAMED as a beneficiary.Also beneficiaries can be removed changed at any time before the Trust is triggered.
Also the little old lady, if she was the Settlor DOES control the Trust and she can decide what the Trust and Trustees do. She can sack the Trustees if she likes.
You're not a lawyer are you.

[Green Fish]

The lurking lawyers out there will correct me if I'm wrong, Capt. Crab, but I reckon that you are talking about your parents' wills. If they have decided to leave their property to X and the Auckland Zoo, then that has no legal effect, because they ain't dead yet, and because they can change their will whenever they please.

But if they have already transferred their assets to a trust, the situation is completely different. The beneficiaries have a current proprietory interest in the trust property - enforceable through the courts.

[captaincrab]

"But if they have already transferred their assets to a trust, the situation is completely differentThe beneficiaries have a current proprietory interest in the trust property - enforceable through the courts."

No they dont.Not while the Settlors are alive. I know how Trusts work, god knows I've set enough of them up.

Instead of arguing your vague opinions why dont you do some research and provide a link to prove your view? I have some nice big textbooks on Trusts you could use if you like? Otherwise I am going to have to start charging you for all this free legal advice I'm giving you (again)
cheers
CC
Back on topic now eh

[cube]

Created a new thread, because it's off-topic for the BC thread, but still interesting.

I thought that the Trustee's were holding things in trust for the benefit of the beneficiaries, and if they could be shown (by the beneficiaries) that they were not doing so (e.g. running the Trust to fill their own pockets), then the beneficiaries had some legal comeback on the Trustees?

I know that the Settlors can (usually) replace Trustees, but that assumes that they care and can agree what cause of action to take.

As a made up example

A divorced couple have set up a trust for their children, and have all 4 Grandparents as the Trustees. The couple can no longer talk to each other, let alone agree on something.

The Grandparents sell some of the assets of the trust and go on a Golfing holiday to Queensland with the proceeds.

Do the beneficiaries (the children of the divorced couple) have any control over the irresponsible actions of the Trustees?

cube

[Green Fish]

Cpt. Crab: All of my big textbooks tell me that the beneficaries have a proprietory interest in the trust property from the time of settlement of the trust. The settlors have no say. They are merely the persons who have transferred the property. After that, it is a matter for the trustee/s and the beneficiaries.

[Green Fish]

cube: The only reason why the settlors can usually replace the trustees is that this power is expressly set out in the trust deed. Were it not for that, the settlors would have no such power.

In your example, the beneficiaries definitely have a claim against the negligent/bent trustees.

It's identical to your super fund manager having a free holiday using your money.

[Green Fish]

The reason for this disgreement is trusts created via a will. Those trusts don't come into existence until the testator dies - because a will has no effect until the death of the testator and until it has been proven to be the testator's last valid will.

For example, assume that you are an only child and that you anticipate that your widowed mother will leave everything to you, via a trust created for your benefit. This does not mean that you have any proprietory interest in your mother's property while she is alive. She can squander her money in whatever fashion she pleases, and there isn't anything that you can do about it. But if she dies, and her property is transferred to a trustee to be held for your benefit, there is plenty that you can do about it.

[spaceman]

One Fish....

Two Fish
Red Fish
Blue Fish ???? no Green Fish ....but wait the two fishes are both green

Though I think he's right and here is a link.

http://www.fmlaw.co.nz/publications/trust_articles/trusts_beneficiaries_rights.htm

Can a beneficiary sue a trustee?
A beneficiary can sue a trustee for breach of duty. The trustee is liable to account for profits or to pay damages. There is no time limit where the claim is based on fraud or fraudulent breach of trust, or for monies or property held by the trustee. In all other cases there is a time limit of 6 years.

Seems pretty clear to me .... a beneficiary can hold a trustee liable

Cheers
Spaceman

[CJ]

Settler has no rights to the trust.

It is the appointor who has the right to change beneficiaries and trustees. This is not the same person as the settlor, though it could be (different hats).

As spaceman has proved, trustees can be sued for breach of fiduciary duty.

Interesting factoid (should be in those big books):

If all beneficiaries group together, they can apply to the courts for the trust to be wound up (ie. if the beneficiries were 3 siblings). this is one reason why a charity is normal used as a beneficiary - not for benevolent reasons but because they cant go to the courts and therefore the action fails as all beneficiaries are not acting in unisen.

[captaincrab]

www.nzgt.co.nz/dirgz/guardian/nzgt.nsf/AttachmentsByTitle/AutoAttach0040/$FILE/GTQG_Trusts.pdf

Heres a nice little pdf to sort out the confusion.
Check out para 3 of Assets where it says
"as a beneficiary of Trust the Trustees are able to give you benefits , but are not legally obliged to do so"
As Settlor , while I am alive I am able to sack Trustees at my discretion.
I see GF is changing his stance to agee that the little old lady can do what she likes. Which was my assertion. Beneficiaries cannot claim "proprietory interest" (a link to a definition would be nice to back up this jargon...) until the asset(s) pass. Until then the Trustees decide in their absolute discretion what beneficiares get, (within the rules)
. Granted in the Trust arguement, there are variables on types of Trusts. For example I am all Settlor and Trustee and beneficiary. Within the rules I have absolute control over the Trust and could dissolve it if I wish or do whatever.
Anyone disagrees with this then maybe you should show a link or reference to support your view. Doesnt seem to happen round here much and all we hear is bush law (but thank you spaceman for trying)

"The little old lady is definitely liable to the beneficiaries for the loss she has caused them."

In this type of Trust example the answer is no. Spacemans reference does not apply to this scenario as the assets have not passed to the "other" Beneficiaries (relatives) Remember the little old lady herself is probably first in line as a Beneficiary (if her husband had died) and THEN the relatives as beneficiaries.If the old lady (The Settlor and Trustee and Beneficiary)had died, then it would apply if the Trustees were inadequate in their administration for the new beneficiaries (relatives next in line), ie they did the BC deal. Then Trustees can be sued.
Bear in mind we are discussing Family Trusts here not Trusts covering commercial investments from the public.

Cube, I doubt the Divorced couple as Settlors would allow that to happen. While they are alive the Settlors could borrow against the asset but only if all Trustees agree, or sell the asset, but only if all Trustees agree. If the Trustees disagree thay could be sacked leaving just the Settlors as Trustees who can then do what they wish.
But to your example, the Trustees cant benefit unless they are ,well beneficiaries. They could be had in this case for theft and Breach of Fiduciary Duty.

[captaincrab]

GF
" All of my big textbooks tell me that the beneficaries have a proprietory interest in the trust property from the time of settlement of the trust. The settlors have no say. "
Wrong; in the example discussed for the little old lady.She as Settlor has a lot of say. Read the PDF

Gf said
" child and that you anticipate that your widowed mother will leave everything to you, via a trust created for your benefit. This does not mean that you have any proprietory interest in your mother's property while she is alive. She can squander her money in whatever fashion she pleases,"

Now you have worked it out.

[ream]

GF
" All of my big textbooks tell me that the beneficaries have a proprietory interest in the trust property from the time of settlement of the trust. The settlors have no say. "
Wrong in the example discussed for the little old lady.She as Settlor has a lot of say.

Captain, do you say that because she's a Settlor or because she's a Trustee? I thought as Settlor she was passing her assets to the Trustees to handle, but giving up control under the Settlor hat?

[captaincrab]

GF you say this "The settlors have no say"

Then this "cube: The only reason why the settlors can usually replace the trustees is that this power is expressly set out in the trust deed."

Looks totally contradictory to me. Can you make up your mind?