Trustee Liability: Protection of Trustees when distributing Flashcards
What are the options to protect trustees when distributing from unknown beneficiaries?
Benjamin order
S27 TA Notice
Retaining a fund
Payment into court
Missing B insurance
Obtaining indemnity from beneficiaries
What is a Benjamin Order?
A court order that permits the T to distribute on the basis of an assumption
Useful when T knows B exists but cannot be located. The order allows assets to be distributed on the basis that the B is presumed dead
What must T do before a benjamin order is awarded?
Attempt to establish the true position and that there is no reasonable prospect of knowing the true position without disproportionate expense
What is the effect of a Benjamin Order on liability?
Relieves T from personal liability if they distribute the property but the assumption turns out to be incorrect
BUT a disapointed B or creditor can make a claim against other Bs to whom the property had been distributed
What is the s27 unknown b notice?
Allows the trustees to ensure they have identified all the beneficiaries in a certain class when this is unclear.
To prevent liability from unknown beneficiaries, T may publish notice of their intention to distribute to known beneficiaries two months after their advertisement.
This puts known beneficiaries on notice that they myst identify themselves to T.
After 2 months T can distribute to known Bs and will have no liability to the unknown ones.
What are the conditions of s27 notice?
Publish 2 months before distribution in
London Gazette, and
a newspaper circulating in the area which any land held on trust is situated and
any other newspaper which is appropriate
What can a beneficiary do if they do end up coming forward later?
Can insert a proprietary or personal claim against the recipient of the property
And if the property has not been fully distributed, it will still be possible for the b to claim any undistributed property from t
What is the option of retaining a fund?
Setting aside trust assets in order to be able to discharge liabilities if missing b come forward after distribution
T may be required to hold that fund for a long time, meaning ongoing admin duties.
Hard for T to quantify the respective interests of the unknown Bs could result in a claim against T for having paid out the wrong amount to known Bs
What is the s63 option of paying into court?
T can pay remaining funds into court
Gives the court legal control over the funds and effectively allows the trustees to retire.
No open ended T duties unlike the retaining fund
From court’s perspective this is the last resort - not easy for T to rid of their obligations
What are the considerations when obtaining a missing beneficiary insurance?
It involves an upfront cost which can usually be met by the trust fund so T will need to decide if it is worth paying
Cheaper than a Benjamin order
What is the option of obtaining indemnity from beneficiaries?
Involves the Bs promising to reimburse the trustees if the trustees are successfully sued by other beneficiaries later
