Beneficiary Challenges to Trust Distributions – What You Need To Know
Beneficiary challenges to trust distributions are becoming more common in Victoria.
What is a trust?
A trust is a legal structure in which property transferred by a grantor to one or more persons hold title to the property (the trustee) subject to an obligation to keep or use the property for the benefit of third parties (beneficiaries).
Types of trusts where you may be named a beneficiary or within a class of beneficiary include:
- Testamentary trusts which are set up in a person’s will and start on their death. Instead of leaving assets directly to a beneficiary, they are transferred into a trust and held on behalf of one or more beneficiaries in accordance with the trust clauses set out in the will.
- Discretionary family trusts which are set up by a person or entity and start on establishment and transfer of assets to the trust to hold on behalf of one or more beneficiaries which may include parents, children and spouses.
- Self-managed superannuation fund trusts which usually are set up and operate on the same basis as discretionary family trusts and are regulated under the Superannuation Rules.
There is a trust – how do I find out if I am a beneficiary?
A written request seeking confirmation of the trust and asking whether you are a beneficiary should be made to the person or entity who is the likely trustee.
If there is a trust and you are a beneficiary you have a right to receive documents and information including:
- The trust deed and any variation.
- Trust financial statements and tax returns.
- All trustee resolution minutes including income and capital distribution minutes.
- Any trust deed vesting minutes or deed wherein the capital of the trust is distributed.
I am a beneficiary and have been excluded from income and capital trust distributions – can I challenge the distributions in potentially having some of them redistributed and paid to me?
If distributions from the trust are discretionary (the trustee has a discretion to choose which beneficiaries to distribute to) you will likely have grounds to challenge the distribution if the trustee made it without:
- Any real and genuine consideration of your needs as a potential beneficiary of the trust. The trustee of the trust must set aside all personal emotions and make all reasonable beneficiary inquiries of you to ensure that it is acting in good faith and with real and genuine consideration.
- Actively informing itself of the differing needs and circumstances of likely key beneficiaries irrespective whether there is a breakdown of relationship if the beneficiaries comprise family members (for example parents and children).
The take out is a trustee of a discretionary trust has no absolute discretion to distribute trust income and capital to one or more beneficiaries in preference to you without first informing itself of your needs and circumstances.
Get beneficiary trust distribution advice now if you are a beneficiary of a discretionary trust and have received no income or capital distributions
Galbally & O’Bryan beneficiary trust lawyers are experienced trust lawyers and can offer free phone/ first consultation advice. Subject to case circumstances our trust lawyers may be able to act “no win no fee”.
Galbally & O’Bryan is one of Victoria’s leading trust challenge law firms.
We have offices at Melbourne, Dandenong and Pakenham.
How to contact our beneficiary trust challenge lawyers
Melbourne Office
259 William Street
MELBOURNE VIC 3000
T (03) 9200 2533
E enquiries@galballyobryan.com.au
Dandenong Office
Shop 9/147-151 Foster Street
DANDENONG VIC 3175
T (03) 9769 2510
E dandenong@galballyobryan.com.au
Pakenham Office
Shop 1, 15 John Street
PAKENHAM VIC 3810
T (03) 5941 7990
E pakenham@galballyobryan.com.au
The information on this website is of a general nature only and may not reflect recent changes to certain areas of law. It should not be relied upon as a substitute for discussing your situation with a qualified legal practitioner. Contact us for more information.