It may be that you are the beneficiary of a trust, but that you are unclear whether you are entitled to receive anything from that trust. Although trust assets such as money, shares or property may be held for your ultimate benefit, they are legally controlled by someone else (the Trustees).
If you are a beneficiary and are concerned that the trustees are not acting properly then we can assist you.
There are many different kinds of trust but the most common kind are the bare/absolute trust and the discretionary trust.
This kind of trust is often used where a beneficiary is entitled to receive trust assets at a particular point in time. For example, when they turn 18 years old.
The Trustees hold the assets for the named beneficiaries who are absolutely entitled to the capital and income from the trust upon reaching the appropriate criteria i.e. turning 18 years old.
The category of beneficiaries is normally fixed leaving the trustees with little say as to who receives the assets. The beneficiaries may be able to compel the trustees to transfer assets to them.
Beneficiaries of a discretionary trust are not entitled to receive anything as of right. Instead the beneficiaries have the potential to receive money and the right to ask the trustees to exercise their discretion in their favour.
With this type of trust the trustees have a great deal of power and ultimately decide who is to receive trust assets, when and how much. The trustees are not obliged to give any particular beneficiary anything from the trust. As a result, discretionary trusts can be a flexible tool and are often used within Wills. They can be employed to help family members who may experience financial need at different stages in their lives or those who may require more financial assistance than others. They can also be used where a potential beneficiary does not have capacity or is not responsible enough to manage their own finances.
As none of the beneficiaries have any guarantee of receiving trust assets, those assets will not form part of their estate upon their death or if they were to divorce. For this reason, they can be a useful estate planning tool.
How to claim money from a Bare Trust
An adult beneficiary can in the first instance, ask the Trustees to pay the money that they are entitled to. If there is no other reason to deny payment then refusing to pay the money to the beneficiary could be a breach of trust, for which the Trustee could be removed.
In a situation where all beneficiaries are adults and there is agreement the trust could be wound up.
It may be that the beneficiary is not entitled to receive the entirety of the trust funds, however, they can still apply to the trustee for a distribution if the money is to be used for their benefit e.g. to pay school fees, buy a property etc.
Depending upon the terms of the trust if a trustee is found not to be acting in the best interests of the beneficiaries that could be a ground for removal.
How to claim money from a Discretionary Trust
There is no guarantee that the beneficiary of a discretionary trust will receive trust assets. Accordingly, such beneficiaries have only limited rights of access to documents from the trust. The initial step would be for the discretionary beneficiary to ask the trustees to consider making a distribution in their favour. The trustees will usually seek information regarding the reason for the request and are obliged to consider any such request properly. The trustees must all agree whether to accept or refuse such a request.
If the Trustees decide to refuse the request, they are not required to give reasons for their decision however, they should keep a detailed record of their decision and proper trust accounts.
If it can be demonstrated that the trustees did not exercise their discretion properly or were not acting impartially, then a disappointed discretionary beneficiary may be able to pursue a claim for the trustee’s removal.
If you believe that you may be entitled to assets from a trust but are uncertain as to what steps to take then please contact us on 01926 880 798 for a free no obligation initial discussion.