Your lawyer can also provide advice on the options available where there is no power to exclude beneficiaries, which may involve recording the settlor’s intentions in a Statement of Wishes or other appropriate document that a particular beneficiary is not intended to receive a trust distribution or any trust information. We are recommending clients review the beneficiaries named in their trust deed and, if permitted by the terms of the particular trust deed, exclude any individuals who are not intended to ever benefit under the trust as this can make compliance with the Act’s disclosure obligations more realistic.
Older trust deeds often contain broad lists of beneficiaries, which may include extended members of family, the spouses and partners of other beneficiaries, and any or all charitable institutions. Lawyers can assist trustees in determining whether to provide trust information and in navigating the Act’s requirements, particularly if there are any concerns around disclosing trust information to a particular beneficiary. Trustees can decline to provide information requested by beneficiaries after they have considered the factors specified in the Act, and the practicalities of restricting any information.ĭepending on the family dynamics involved, these obligations can understandably result in difficult situations whereby beneficiaries, once aware of their status as a beneficiary, may believe they are immediately entitled to trust assets. Trustees were provided with a 12-month timeframe to notify under the Act and need to ensure they comply with these obligations on an ongoing basis. The obligations include a presumption that trustees notify all beneficiaries aged 18 and older, or the representatives of beneficiaries younger than 18, of the fact that they are beneficiaries. The Act imposes new obligations on trustees relating to disclosure of trust information, introduced for the purpose of providing beneficiaries with sufficient information to hold trustees to account. In such circumstances, a lawyer can assist in determining whether any other options are available. While trust deeds often contain an express power to make the changes necessary to avoid situations like the above, we have encountered many trust deeds which do not. the method of investing trust assets would potentially expose the trustees to liability.companies set up by law and accountancy firms to act as trustees) and
#Trustee duty to inform existence of trust alabama professional
the trust deed does not allow for the remuneration of professional trustees or trustee companies (e.g.trustees cannot validly apply trust assets for the benefit of themselves as beneficiaries.If these default duties are not modified or excluded, it can result in situations where:
The Act sets out ten default duties which apply unless modified or excluded by the terms of a trust deed. In addition to legal advice, we strongly recommend that tax advice is sought before deciding to wind up a trust as transferring trust assets into a client’s personal name may have unintended tax consequences. When deciding whether to keep or wind up their trust, clients should consider the purpose for which the trust was established, the specific assets held by the trust, who is likely to benefit from the trust, and whether there have been any changes in circumstances. When the new Act came into force there was a lot of commentary that trusts should now be wound up as a result, but it is important to remember that many of the Act’s obligations already existed before the Act came into force.
What clients are considering in relation to their trusts In light of these changes and the fact a large number of the trusts and associated documentation we have reviewed has needed updating, we continue to recommend that anyone with a trust should contact their lawyer for a trust review.
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