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NSW Can Trustee Close Down Trust Fund Without Telling Beneficiary?

Discussion in 'Wills and Estate Planning Law Forum' started by Steve500, 31 August 2016.

  1. Steve500

    Steve500 Well-Known Member

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    Trust Fund:

    I'm a beneficiary in discretionary trust fund. The Trustee has cancelled/closed down the Trust fund without telling me, the beneficiary. Is this allowed, not notifying me of this Trust fund being cancelled/closed down?

    The trustee also claims they are a beneficiary on this Discretionary Investment Trust fund. Is the Trustee allowed to keep the Asset (the property) for themselves and sell it and have the money for themselves? Or do I own that capital as the sole beneficiary?
     
  2. Sophea

    Sophea Well-Known Member

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    Technically in a discretionary trust a beneficiary only has the right to be considered for a distribution of the trust assets - you do not have a beneficial interesting in anything until the time at which the trustee exercises discretion to distribute something to you.

    However, there are circumstances outlined in the Richstar case in which a beneficiary would be considered an effective controller of the trust, such as where the beneficiary is the director and secretary of the trustee company and the original appointor, the beneficiary is the trustee and appointor was the person's spouse and where the beneficiary was the appointor. In this situation they may have the right to request distribution of the capital to them.

    The judge in the Richstar case stated that " where a discretionary trust is controlled by a trustee who is in truth the alter ego of a beneficiary, then at the very least a contingent interest may be identified because 'it is as good as certain' that the beneficiary will receive the benefits of distributions either of income or capital or both."

    What does the trust deed say?
     

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