Protection of Trustees when distributing Flashcards
What is a Benjamin Order?
A court order permitting trustees to distribute on the basis of a particular assumption, depending on the circumstances of the case.
Useful for missing beneficiaries presumed dead.
What must trustees do to obtain a Benjamin Order?
Make full enquiries to establish the true position and demonstrate no reasonable prospect of knowing the true position without disproportionate expense.
This relieves trustees of personal liability.
What can a disappointed beneficiary or creditor do after a distribution?
Make a claim against other beneficiaries to whom the property had been distributed.
What is the purpose of S27 TA 1925 Notice?
Useful for unknown but missing beneficiaries.
How long after advertisement of a s27 notice can trustees publish a notice of their intention to distribute?
Two months.
Where must the notice of intention to distribute be placed?
In the following:
* The London Gazette
* A newspaper circulating in the area of the land held on trust
* Any other appropriate newspaper.
What protection do trustees receive after publishing the S27 TA 1925 Notice?
Protection against personal claims.
What claims can be made against the recipient of the property after distribution if a s27 notice was made?
Only proprietary or personal claims against the recipient of the property.
What are retained funds in the context of trust assets?
A fund set aside to discharge liabilities if missing beneficiaries come forward after distribution.
What are the disadvantages of retained funds?
- Trustees may be required to hold the retained fund for a long time, meaning ongoing administrative duties.
- Risky - difficult for the trustees to quantify the respective interests of known and unknown beneficiaries
Therefore, could result in a claim against Ts for wrongful distribution
What is ‘Payment into court’ under s63 TA 1925?
It involves giving the court legal control of the funds and allowing Trustees to retire.
This course of action is a last resort and should only be taken if all realistic options for tracing the beneficiaries have failed.
What is missing beneficiary insurance?
Trustees may take out insurance and then distribute according to the information they have available.
Trustees will be liable to any more beneficiaries who come forward but can use insurance to pay it. This option involves an upfront cost and is significantly cheaper than seeking a Benjamin order.
What does obtaining indemnity from beneficiaries involve?
Beneficiaries promise to reimburse the trustees if they are successfully sued by other beneficiaries later.
This option is cheaper and quicker than some alternatives but does not protect the trustees from claims and is riskier than insurance.
What is a risk associated with obtaining indemnity from beneficiaries?
The indemnifying beneficiary may resist payment, requiring another expensive litigation.
