Beneficiary Definition Flashcards
Q1. (Article 1(1) & Traditional Concepts)
How does Article 1(1) of the Trusts (Jersey) Law define a “beneficiary,” and how does it combine two traditional trust ideas?
A1. A “beneficiary” includes anyone entitled to benefit under the trust or in whose favor a discretion to distribute may be exercised. This merges the idea of a traditional “beneficiary” (with a fixed right) and an “object” of a discretionary power.
Q2. (Potential Objects)
If a trust instrument empowers the trustee to add potential individuals as beneficiaries, are they counted as “beneficiaries” before being added?
A2. No. Merely being “identified” in a letter of wishes or possible to be added later does not make one a beneficiary. They must be formally appointed into the discretionary class first.
Q3. (Beneficiary Principle)
Why was having at least one identifiable person as beneficiary historically crucial for private trusts?
A3. Common law insisted on the “beneficiary principle”: there had to be someone with an enforceable right against the trustee – except for certain charitable purposes. Jersey law allows more flexibility, e.g. non-charitable purpose trusts.
Q4. (Article 10(2)–(3))
What does Article 10(2)–(3) say about adding or excluding beneficiaries, or imposing obligations?
A4.
The trust terms may provide a power to add new beneficiaries or exclude an existing one.
They may also impose an obligation on a beneficiary as a condition for benefit, subject to Art 30(10) (fraud, willful misconduct, gross negligence).
Q5. (Article 36 – Class Interests)
What are the three “rules” in Article 36 for identifying class beneficiaries?
A5.
A class closes when no more members can be added.
A woman over 55 is deemed incapable of bearing a child.
If no class member exists for an income interest, income is accumulated until a member exists or the class closes.
Q6. (Article 10(10)–(12))
Under Article 10(10)–(12), what key points define a beneficiary’s interest?
A6.
It is movable property,
They can sell, pledge, or otherwise deal with it unless the trust deed forbids,
A settlor or trustee can also be a beneficiary.
Q7. (Protective/Spendthrift Trusts – Article 35)
How does Article 35 allow for “spendthrift” or “protective” trusts in Jersey?
A7. A settlor can include terms so a beneficiary’s interest is restricted or forfeited if they become bankrupt or if they attempt to alienate it – or even if certain other conditions occur.
Q8. (Re Esteem Settlement)
Does a Jersey beneficiary typically hold an equitable proprietary interest in the trust property?
A8. Yes. In Re Esteem, the Royal Court confirmed a Jersey beneficiary (like an English beneficiary) has an equitable ownership interest – subject to trust law rules on “bona fide” purchases and trustee powers.
Q9. (Article 10A)
How can a beneficiary disclaim their interest, and how does Jersey law’s approach differ from traditional English law?
A9. The beneficiary may disclaim wholly or for a specified period, even if they already benefited, and can also allow revocation of a disclaimer if the trust’s terms permit. All disclaimers must be in writing – more flexible than England’s one-time disclaimer rule.
Q10. (Article 29)
Summarize how Article 29 addresses a beneficiary’s right to request trust information.
A10. It says the trust instrument can regulate disclosure rights. By default, beneficiaries (or enforcers) can request accounts. However, trustees can refuse if they believe it’s in beneficiaries’ best interests, or if it reveals discretionary decision reasoning. The court can override any refusal.
Q11. (Re Rabaiotti)
What did Re Rabaiotti confirm about a beneficiary’s right to see “trust accounts”?
A11. Under the old wording of Art 29 (before 2018 amendments), beneficiaries had a positive right to see documents forming part of the trust accounts. Still, the court retains a discretion to deny or limit disclosure in special circumstances.
Q12. (Schmidt v Rosewood)
Do discretionary objects have a right to trust documents similar to fixed beneficiaries?
A12. Yes. Following Schmidt v Rosewood, discretionary objects can request information. In Jersey, the broad Article 1(1) definition of beneficiary includes them, so the same general approach to disclosure applies.
Q13. (Summary)
Outline the main points defining who is a “beneficiary” and the nature of their rights.
A13.
Article 1(1) merges fixed beneficiaries and discretionary “objects.”
Trustees can add or remove beneficiaries if the trust deed says so.
A beneficiary’s interest is movable, typically transferable.
Article 35 allows protective or spendthrift provisions.
Beneficiaries hold an equitable interest in trust assets but can disclaim.
Disclosure of trust information is governed by Article 29 and court supervision.
