Beneficiaries

Question 1

What is a fixed trust?

Answer 1

A trust in which the entitlement of the beneficiaries is fixed by the settlor = “fixed interest trust “
- must have equitable proprietary rights = assets which can be sold or transferred in another way
- they can also be asserted against 3rd parties;
-Vested right= have a current right
- contingent right= conditional right

Question 2

What is a discretionary trust?

Answer 2

A trust under which the trustees have a discretion to distribute between the objects of the trust
- Objects of a discretionary trust do not have proprietary rights
- they cannot assert their rights against third parties

Question 3

What are personal rights in relation to objects of trusts?

Answer 3

• Beneficiaries of a fixed trust have the right to compel the proper administration of the trust = can direct the trustees to take action eg suing a 3rd party on behalf of the trust
• beneficiaries can sue the trustees for breach of trust if; they act outside their powers and breach their duties = any compensation will be paid back to the trust rather than the individuals
• they also have the right to be informed of their entitlement under the trust once their interest has vested

Question 4

What are the personal rights in relation to objects of discretionary trusts?

Answer 4

• Similar to objects of trusts, just more limited (as they do not have proprietary interests in the trust fund)
  -They can enforce the trust by asking the court to ensure the discretion is exercised
  Once discretion has been exercised in favour of an individual,they have the right to be informed of their entitlement
• they can also sue the trustee for breach of trust AND require the trustee to personally compensate the trust and for any loss