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Buachaill
Buachaill, Barrister
Category: Law
Satisfied Customers: 10267
Experience:  Barrister 17 years experience
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Regarding payment to beneficiaries: Does a trustee [son of

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Regarding payment to beneficiaries: Does a trustee [son of settlors] on the death of the second [parent] settlor of a flexible trust, have 'absolute discretion' in choosing the immediate named beneficiaries [3 children, including himself as a single surviving trustee] rather than all potential beneficiaries [so excluding the (now) adult grandchildren of settlors], or has he, by a conflict of interest, etc, breached his fiduciary duties to the grandchildren and so is legally liable? ie. does the trustee need to 'repay' what he owes the grandchildren.

Submitted: 2 years ago.
Category: Law
Expert:  Nicola-mod replied 2 years ago.
Hello,
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Nicola
Customer: replied 2 years ago.

Yes, please continue to provide me with a legal answer, as the settlor's grandchildren need to know if and what they can do to pursue their trust shares from their uncle - the trustee in question.

Thank you

Expert:  Nicola-mod replied 2 years ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Customer: replied 2 years ago.

When can I expect my Expert's answer, please?

Expert:  Nicola-mod replied 2 years ago.
Hello,
I'm afraid JustAnswer cannot guarantee a time, however most questions are answered in a timely manner.
We will continue to look for a Professional to assist you.
Thank you,
Nicola
Customer: replied 2 years ago.

Can you please tell me how many Professionals you have available who are experts in Trust Law to answer my question.

Will they contact me by email directly over the weekend?

Thanks.

PS. I've received a request to complete a questionnaire about your service but I cannot respond until I receive the answer I've paid for over 2 days ago.

Expert:  Buachaill replied 2 years ago.
1. There are two legal principles at issue here. Firstly, under a discretionary trust, none of the beneficiaries, such as the grandchildren in this situation have any interest in the asset of the trust, nor have they any lawful expectation that they will be given any share in the trust assets upon the lawful exercise of discretion by the trustees of the discretionary trust. So there is no right in law to call upon the trustees to give them anything. Nor can they challenge any lawful exercise of discretion by a trustee in vesting the trust assets in lawful beneficiaries. In this regard the discretion of the trustees is said to be all encompassing or absolute.
2. Secondly, a trustee cannot himself benefit as a beneficiary, by the exercise of his discretion as a trustee. So here, if the uncle, or son of the settlor, purported to vest trust assets in himself by his own discretion as trustee, then this purported vesting can be set aside upon action by any of the beneficiaries as it is an unlawful exercise of the power of the trustee. So here, the grandchildren beneficiaries, can set aside so much of the vesting of the trust assets by the uncle in himself. However, they cannot challenge any lawful vesting in the other two children of the settlor. Such assets as vested in the uncle, then go back into the trust and will remain trust property until such times as new trustees are appointed to act as trustee or if this uncle/trustee is not removed, until such times as the trustee exercises his discretion lawfully as trustee afresh under the terms of the trust.
Customer: replied 2 years ago.

Thank you Mr Buachaill, the 2nd part of your answer is indeed encouraging for the grandchildren. In this case, there was no 'letter of intent/wishes' with the trust [appreciate this is not binding on the uncle trustee], but the settlor's Will directed distribution of all assets to children and grandchildren in 2/8th and 1/8th shares, respectively. Can this also be used as the guide to distribution for grandchildren in the trust of the uncle's set aside trust property, or are other principles involved for this. At this point are the grandchildren still uncertain of receiving anything if we go to the 1st part of your answer. In any case, how would you advise the grandchildren to proceed now if you were representing their interests? Thank you.

Expert:  Buachaill replied 2 years ago.
3. You need to realise that, as I have said, the grandchildren have no legally enforceable right to anything under the trust. There must be an exercise of discretion by trustees to give them anything. Here you need to realise that the settlor's will is not binding. If I was advising the children I would move to set aside the trustee's bestowal of trust assets on himself and move to have new trustees appointed in his place. Then these new (friendly) trustees should be encouraged to exercise their discretion under the trust to give assets to the grandchildren.
Customer: replied 2 years ago.

Thank you, ***** ***** is the procedure to 'set aside' the trustee's assets and who can initiate this. To appoint new trustees may become a problem if the Life company has essentially 'closed' the trust when it paid out to the uncle/trustee, who then distributed the funds equally to himself and cheques to his two siblings. Is there a general procedure to appoint new trustees in such a case?

Expert:  Buachaill replied 2 years ago.
4. Se e a solicitor and hire a barrister to set aside both the vesting of the assets in the trustee and the replacement of the trustees. It is by legal action you put this right. Each requires a legal action, as there is no procedure otherwise. It makes no difference that the Life company might have wound up the trust. The legal action will still go ahead and the assets dealt with.
Buachaill, Barrister
Category: Law
Satisfied Customers: 10267
Experience: Barrister 17 years experience
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