Meet the trustees legal companion

meet the trustees legal companion

Murdoch University Electronic Journal of Law The trustee's duty to provide information to beneficiaries is a prescriptive (positive) duty, which . in the possession of the defendant would probably meet the wishes of both parties. . of wishes is a trust document - "an essential component of, or companion to" the trust deed. The law governing the administration of trusts creates dilemmas in how to resolve numerous Trustees must formulate a strategy designed to meet the trust's objectives: executor's partner was invalid for purposes of SCPA §a. between the common law duty of broad disclosure to beneficiaries of a . In fact, [ attorney] never met [decedent], despite his intention to do so. former MR (c ) & by drafting a trust which named his partner as the.

Medicaid pays for most medical expenses not covered for the individual by Medicare and Supplemental Health Insurance. For many disabled individuals, Medicaid provides the only safety net. You, as trustee of the Special Needs Trust, make payments for the beneficiary not to the beneficiary at your discretion. The beneficiary cannot expect payment on demand out of the trust. Payments out of the Special Needs Trust supplement rather than replace public benefits. The trustee, at the trustee's discretion, can pay for such things as medications, medical equipment and therapy not provided by Medicare and Medicaid, educational instruction, musical instruments, travel, entertainment and other supplementary items provided that assets given to the beneficiary are not easily convertible to cash.

As trustee, you are responsible for filing fiduciary income tax returns for the trust. It is critical that you, as trustee, accurately, honestly and promptly report income and assets according to program rules. You will be able to obtain copies of the specific program reporting rules at the site of each program or by calling the appropriate agency, and requesting copies of reporting obligations.

You must keep clear and accurate records of what you have spent on behalf of the beneficiary and any other funds spent by the trust.

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It is critical that the sum total of all assets in accounts in the beneficiary's name be an amount less than the asset limit for the benefits program. Pay particular attention to accounts held by a facility trust fund or to jointly owned or other possibly obscure accounts.

Overpayments usually have to be repaid to SSI. Also, be sure that you have organized the affairs of the beneficiary so that you do see all notices from the funding agency. If you use direct deposit, be sure you are the addressee for correspondence. Secondly, on a practical level a requirement to give reasons would add to trustees' already onerous obligations.

Thirdly, the beneficiaries' knowledge of the reasons for the trustees' discretion may embitter the relationship between trustees and beneficiaries, and that between beneficiaries inter se, particularly in the case of family settlements. This is a long standing principle and rests largely, I think, on the view that nobody could be called upon to accept a trusteeship involving the exercise of a discretion unless, in the absence of bad faith, he was not liable to have his motives or his reasons called in question either by the beneficiaries or by the court.

To this is added a rider, namely that if trustees do give reasons, their soundness can be considered by the court. In my opinion, the plaintiff is entitled to inspect the documents listed in that letter, subject to the defendant's right to provide copies with the deletion of the names of any persons in respect of whom confidentiality is claimed. The provision of copies of those documents, rather than the inspection of the originals in the possession of the defendant would probably meet the wishes of both parties.

If, in the result, the plaintiff contends that it requires consequential further inspection, that can be the subject of an application in due course. No entitlement to documents which are not trust documents The beneficiaries' right to inspect documents is limited to trust documents.

Thus trustees are not obliged to disclose documents which are "not property of the trust, but prepared by the trustee for his own purposes.

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Secrecy provisions The beneficiaries' rights to access information may be regulated by the trust instrument. Thus beneficiaries do not have access to documents which are expressed to be confidential, especially where such documents may relate to the exercise of the trustees' discretions.

The general rule that a beneficiary has a proprietary interest in and a right to inspect trust documents was balanced against a rule to the effect "that trustees acting in good faith are not bound to disclose reasons for the exercise by them of a discretionary power or the information even if committed to writing which may bear upon or affect those reasons.

There is a general rule that a cestui que trust has a proprietary interest in and a right, therefore, to inspect trust documents O'Rourke v. Darbishire [] ACat p. In Re Londonderry's Settlement [] 1 Ch at ppmust be balanced with another which is to the effect that trustees acting in good faith are not bound to disclose reasons for the exercise by them of a discretionary power or the information even if committed to writing which may bear upon or affect those reasons.

The actuarial reports are obtained by the respondents to enable them to exercise one or more of the powers which by clause 2. When one considers this in conjunction with the secrecy provisions of the deed clause 7. Moreover the right conferred upon the respondents in clause 7.

There is an implication from it that one participant is not entitled to inspect documents containing such information. Access to memorandum of wishes - trustee's obligations of confidentiality In Hartigan Nominees Pty Ltd v Rydge [47] the New South Wales Court of Appeal considered whether the beneficiaries or potential beneficiaries of a discretionary trust were entitled to have access to a memorandum of wishes to which the trustees had regard to in carrying out the trust.

Murdoch University Electronic Journal of Law

A majority of the Court [49] decided there was no warrant for the disclosure of the memorandum of wishes. Mahoney JA affirmed the Re Londonderry's Settlement [50] test and held that the right of a beneficiary to obtain on request documents or disclosure of information in relation to the trust is limited to documents which are the property of the trust.

The right did not extend to the property of the trustee - material prepared by the trustees for their own purposes such as to administer the trust or discharge their duties. Even if such documents were the property of the trust, because they were confidential they could not be disclosed.

I would, for myself, see the matter of confidentiality as being of particular significance in discretionary trusts of the present kind. In deciding questions of disclosure, it is important in my opinion to have regard to the essential nature of such discretionary trust.

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Such a trust is not a mere commercial document in which the public may have an interest. It is a private transaction, a disposition by the settlor of his own property, ordinarily voluntarily, in the manner in which he is entitled to choose. Special cases apart, it is proper that his wishes and his privacy are respected.

In a discretionary trust of this kind, the settlor has placed confidence in his trustee and has on that basis transferred property to him.

meet the trustees legal companion

It has, I think, been the purpose of the law to respect that trust. It depends upon confidence and confidentiality. The settlor seeks to have the trustee resolve, without unnecessary abrasion, the conflicting claims of persons in an area, the family, where disputes are apt to be bruising. In cases of this kind, if a settlor's wishes cannot be dealt with in confidence, the purpose of the trust may be defeated.

His Honour thought that the proprietary interest theory was not helpful. In this case the fact that a separate memorandum was delivered and the wishes were not disclosed in the trust instrument or a document attached to it lead to the conclusion that the memorandum was given to the trustees in circumstances of confidence.

That the instigator of the trust did not disclose his wishes in, or in a document attached to, the deed of settlement, but delivered a separate memorandum of wishes to the trustees, leads to the conclusion that it was his, and thus the settlor's, intention that his wishes should remain confidential, and consequently that the contents of the memorandum were obtained by the trustees in circumstances of confidence, which bound the trustees not to disclose them to the respondent and to withhold the memorandum from him.

Trustee Duties: Disclosure of Information - [] MurUEJL 13

Further the beneficiary has a proprietary interest in the document. His Honour did not consider it imperative to decide this as both the trust document approach and the proprietary approach were unsatisfactory in his view.

Londonderry's Settlement is an unsatisfactory decision and does not represent the local law. To accept that as a prerequisite to access that a beneficiary should be able to show misconduct or wrongdoing on the part of the trustee, would be to impose an unreasonably high barrier to the effective supervision by the court of the actions of trustees ostensibly subject to that supervision.

The trustee was a professional trustee, had access to advice, was paid fees and should be accountable. The rule of secrecy which the trustees urge is one which may effectively deny the beneficiaries access to relevant information. Those rights included the rendering of the trustees accountable before the law for the discharge of their duties as trustees.

meet the trustees legal companion

There had been no express request that the memorandum of wishes be kept secret by the trustees. If there was an express statement as to secrecy the position may well be different.

Australian society accepts a generally greater level of accountability than has been accepted by the law of England. There are different attitudes to the role of the individual and the citizen in society; the proper function of the courts; and the accountability of one person to another before the law. In discretionary trusts in Australia what is more likely to be at stake is money and fiscal obligations than the reputation of the family name. The anxiety about washing "dirty linen" in public is less likely to concern an Australian family caught up in a dispute about a discretionary trust than it is in the different social milieu of a noble family in the United Kingdom.

If a claim of confidentiality is made by the trustees, the onus is on the trustees to justify denial of the beneficiaries' prima facie entitlement to information. A claim of confidentiality in the best interests of the beneficiaries It has been suggested that a broader claim of confidentiality may be available to trustees, even in the absence of an express or implied provision as to confidentiality in the trust deed limiting the beneficiary's rights of access to information - a claim that maintaining the confidentiality of certain trust documents is in the interests of the discharge of the trustee's duties to the beneficiaries as a whole.

IOOF had been engaged in ongoing legal proceedings relating to a management dispute. The appellants had called upon IOOF to permit them to inspect and to copy a large number of documents in its possession.

Over time IOOF has made a good many documents available to the plaintiffs, albeit reluctantly, and the appellants claimed it had done so only under the threat of legal proceedings. The case concerned a dispute over access to two groups of documents that IOOF continued to refuse to disclose to the appellants. Documents relevant to the management dispute: At first instance the judge concluded that the appellants had no right as of course to inspect the documents in question - the mere assertion of their status as a beneficiary did not give them the right to inspect the documents in question.

On appeal to the Full Court the trial judge's decision to uphold the trustee's right to exercise its discretion to refuse access was upheld.

meet the trustees legal companion

Doyle CJ [66] noted that the function of the Court in these proceedings was "to decide whether the trustee has a discretion to refuse to permit inspection, not to decide whether that discretion, if it exists, should be exercised.

Its exercise is a matter for IOOF. Are the relevant documents trust documents?