Trust Beneficiaries Research Articles

Access to the memorandum of wishes by a beneficiary of a discretionary trust—an analysis of the law in New Zealand

Abstract This article considers whether the memorandum of wishes is trust information that should be disclosed to a beneficiary of a discretionary trust. The memorandum of wishes makes for interesting discussion as it is generally a non-binding document that can assist trustees when they exercise their discretionary power. To answer the question whether and when the memorandum of wishes should be made available to beneficiaries is not straightforward. The theory of why beneficiaries have the right to access trust information, case law that has unfolded on this issue, and the impacts of the Trust Act 2019 all play a role in making this assessment.

Protectors in Liechtenstein: protecting or threatening trust and foundation assets?

Abstract When setting up trusts and foundations, settlors and founders struggle with giving away assets and control to professional trustees in Liechtenstein whom, in many cases, they have never met. At first, to bridge that gap, settlors’ confidants accepted roles as protectors and the settlor conferred powers on them aimed at policing and, if necessary, firing the trustee. In the absence of enforceable rights to information and locus standi in Liechtenstein courts, discretionary trust beneficiaries greatly rely on the assistance of such protectors, especially when trusts are in crisis or dispute. More recently, however, protectors have undergone sophisticated (re-)structuring and adopted new identities, e.g. as corporate entities, thus not necessarily facilitating governance, but sometimes adding complexity. Increasingly, the international regulatory framework has impacted that structure, as the threat of being considered a controlling protector might lead to undesired effects, including protectors being registered and exposed in BO Public Registers, or, even worse, being reported as beneficial owners of trusts and foundations to their local tax authorities. As is the case with any legal concept, structuring provides protectors with both opportunities and pitfalls. This article wishes to set out how protectors can save trusts and foundations from collapsing and how to protect assets from the onslaught of the settlors’ creditors. That said, there are some downsides: a very recent Supreme Court case shows that using protectors might doom the trust or foundation to failure unless pristine standards and principles are followed.

Weighing the factors—the perils of trustee decision-making

Abstract In B v Erinvale PTC Limited & O'rs 2020 (2) JLR 316 (Erinvale), the Royal Court of Jersey has handed down a judgment which has important implications for trustee decision-making processes. In the context of a divorce between two of the beneficiaries (the husband also being the settlor), the trustee was requested to add the wife as a beneficiary of the relevant trust in her own right, her beneficial status being contingent at that time on her being the settlor’s spouse. The judgment in Erinvale, in which the Court scrutinised whether the wife’s request had been correctly decided by the trustee, stands as a stark illustration of the exacting standards which trustees are expected to meet.

A Research on the Basic Structure of Family Trust and Testamentary Trust Disputes

「福祉型信託」（Welfare Trusts）為家族治理（Family Governance）、家族事業所有權（Family Property Business Ownership）、家族財產事業經營管理（Family Property Business Management）所組成之「家族信託」（Family Trust）核心，具有民事信託與商業信託之雙面性，且非僅僅為單純之財產管理制度，而係「財產管理運用、活用以及傳承」機能之最大程度展現，以完整支援信託利益享有者包括生活及財產管理全盤支援架構建立之身心照護。有鑑於此，本文以我國信託法主要繼受之日本「信託法」法制規範及其相關學理與實務發展為比較法對象，以福祉型信託為核心，對家族信託與遺囑信託進行研究。首先，家族信託制度之建置上，須考量其與消費者權益調和、裁量信託使用界線與合理分配、共益定性、第三人介入之限制、責任信託之搭配。其次，針對永續傳承、連續受益人、特留分、目的信託與特定目的信託、「閉鎖性公司＋自益信託」架構等家族信託爭議問題，提出研究對策。再者，家族信託法制尚未完整建立前，應以前述福祉型信託為核心之家族信託為基礎，對信託行為與方法解釋與修正、受益人權益確保、遺囑信託受託催告、法院選任遺囑信託受託人、遺囑信託委託人之繼承人、替代遺囑信託等議題進行解析，俾使我國遺囑信託功能確實發揮與家族信託內涵相互搭配。最後，從家族信託架構下之委託人與受託人角色與功能，提出本文之結論與建議。<br />“Welfare trust”is the core of a family trust composed of family governance, family property business ownership, and family property business management. It has duality of civil trust and commercial trust in that it is not only a pure property management system, but also the maximum demonstration of the function of property management application, utilization, and inheritance to support the physical and mental care of the trust beneficiaries which include the establishment of a comprehensive support structure for life and a thorough property management. In the establishment of the family trust system, this article firstly argues that it is necessary to consider the coordination with consumer rights, discretionary trust boundaries and reasonable distribution, common benefits, restrictions on third party intervention, and liability trust. Secondly, this article puts forward the research results on the controversial issues of family trust such as perpetual inheritance, continuous beneficiaries, legally reserved portion, purpose trusts and special purpose trusts, and“closed company with self-benefit trust”structure. Furthermore, before the establishment of a complete family trust legal structure, it is important to analyze the combination of testamentary trust and family trust, interpretation and amendment of trust behaviors and methods to ensure the rights and interests of the beneficiaries, and the appointment the trustee of the testamentary trust by the court, the successor of the settlor of the testamentary trust, and alternative testamentary trust (trust with successive beneficiaries). Finally, the article provides conclusions and suggestions from the perspective of the settlor and the trustee of trust.<br />

Correlation Analysis of Interpersonal Communication Competence of Corporate Social Responsibility Facilitators, Stakeholder Trust Level, and Corporate Reputation

The problem of communication such as misunderstanding, there is no feedback, and the ineffectiveness of a message often occurs while the company communicates or interacts with stakeholders, moreover runs the CSR program. The communication problems above affected one of the CSR goals. CSR can improve people living in the region around the company like happened in the District of North Semarang because it has the highest poverty rate in Semarang city. Not achieving the CSR objectives will because residents who live around the company have poor judgments against the company and have no trust against the company and so, causes a poor reputation against the company. Moreover, if the company has excessive gas emission and one of them is PT. Indonesia Power Semarang PGU. The research has the purpose of determining if there is a relationship between the effectiveness of interpersonal communication done by the facilitator of CSR and the level of trust beneficiaries with the reputation company of PT. Indonesia Power Semarang PGU. This research is a quantitative research using the theory of communication effectiveness and reasoned action (TRA). Sample this research is Group guidance of PT. Indonesia Power Semarang PGU is the Joint Business Group (KUB) Prima Indosutera in the District of North Semarang. Based on the research results, the effectiveness of interpersonal communication and trust beneficiaries’ level significantly relates to its reputation. The things above showed through the significance value of the hypothesis test performed, more effectively the communication interpersonal has done so. The company’s reputation is better (positive) than such a hypothesis has a significance value of 0.000 (0.000 s of 0.01).

Trust Planning and the Washington State Capital Gains Tax

On April 25, 2021, the Washington State Legislature enacted a new state capital gains tax. Before now, Washington state has been one of the few states that does not impose a tax on either income or capital gains. Because of limitations imposed by the Washington State Constitution, the legislature has been forced to characterize the tax as an excise tax, rather than treat it as an income tax as would the federal government and every other state. Based on the statute’s structure and its presentation as an excise tax, whether intentionally or unintentionally, the legislature appears to have excluded both the trustees and beneficiaries of non-grantor trusts from being subject to the tax. This Article reviews the difference between grantor and non-grantor trusts, examines the apparent discrepancy between the two under the statute, and explores tax strategies planners and clients might consider pursuing in the wake of the new tax.

The distributions by foreign trusts to Italian tax residence beneficiaries: the new rules

Abstract New rules in Italy are now reshaping years of discussion about the use of non-tax resident trusts. Although the new law places certain interpretative issues, in the following article, the author analyses the main concepts and the impact of Article 13 of Law Decree 124/2019 in connection with guidelines previously issued by the Italian Tax Office and circular newsletter 61/E/2010 in particular. For non-Italian resident trusts, the distinction between capital and income, within the Italian meaning and according to the new (tax) assumption also related to black-listed income, is of paramount importance as the new rules set the tax treatment for trust attributions to Italian tax resident trust beneficiaries.

The SECURE Act: Retirement Plan Distributions after the Death of a Beneficiary

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) of 2019 made very significant changes to required minimum distributions (RMDs) paid to beneficiaries of defined contribution retirement plans, including IRAs. The Act generally applies to beneficiaries of a defined contribution plans if the plan participant dies after 2019. The most significant provisions of the Act limit RMDs that are life or life expectancy distributions. Life-expectancy RMDs are now available only for eligible designated beneficiaries (EDBs). EDBs are defined as (1) the surviving spouse of a plan participant, (2) a minor child of the participant, (3) a disabled individual, (4) a chronically ill individual, or (5) an individual who is not more than ten years younger than the participant. The Act also replaced the alternative five-year distribution rule with a comparable ten-year rule. Under the new ten-year rule, a plan is required to distribute the participant’s entire benefit before the end of the tenth calendar year after the participant’s death. The Act also generally requires a plan to distribute all the plan’s remaining benefit before the end of the tenth calendar year following the death of an EDB who was receiving distributions over his or her life expectancy. The Act imposes a similar rule on the post-2019 death of a designated beneficiary in a plan that otherwise would not be subject to the Act because the participant died before 2020. These distributions required after the death of an EDB (or a designated beneficiary in a pre-2020 plan) are referred to in this Article as successor ten-year distributions. They are the focus of the Article. A major problem may occur on the death of an EDB in a plan with multiple EDBs. In addition to applying the successor ten-year rule to the benefit of the deceased EDB, the SECURE Act will also generally apply the rule to the interests of the other living EDBs. The underlying theory is that a plan is allowed only one method for payment of RMDs, and the SECURE Act imposes that method upon the death of an EDB. Solutions to the problem of multi-beneficiary plans lie in the ability of a participant or trustee to divide a plan into separate accounts for each beneficiary. If such a separation is timely, the death of an EDB in one separate account should not affect the method or period under which RMDs are being made from the separate accounts of other EDBs. Unfortunately, the separate account solution generally does not work for multiple EDBs who are beneficiaries in a “see-through” trust. The interest of a see-through trust in a plan cannot be divided into separate accounts for trust beneficiaries. Instead, the solution lies in the proper creation of separate subtrusts for each beneficiary that insulate the plan interests of living EDBs from the successor ten-year rule applicable to the interest of a deceased EDB. Note though that, in some unique circumstances, a special type of trust allowed by the SECURE Act, an “applicable multi-beneficiary trust” (AMBT) may provide a more convenient way to divide a trust into separate subtrusts. Similar solutions that limit the effect of the successor ten-year rule may also be available for designated beneficiaries in a pre-2020 plan that is otherwise not subject to the SECURE Act.

Advanced Lung Cancer Survival in Times of Economic Hardship: A Greek Paradigm

Objective: Greece has been affected more than any other European country from the financial crisis that began in 2010. Just 20 months after Greece exited an eight-year long aid program, forecasts of a new recession within 2020 due to COVID-19 pandemic make concerns regarding the compromise of health care quality within the new crisis relevant once again. In this study we sought to evaluate clinical outcomes in patients with advanced lung cancer in the pre-crisis and crisis era in a dedicated oncology centre in Greece. Methods: A retrospective analysis of 522 consecutive medical records of lung cancer patients admitted in a Greek dedicated cancer hospital between the years 2008-2013 was performed. Progression Free Survival (PFS) and Overall Survival (OS) were calculated for advanced lung cancer compared over two consecutive time periods using 2010 as a cutoff point.Result: 71 and 78 patients comprised the study sample for the two periods. PFS and OS were similar over the two periods (7.73 [6.42-9.04] vs. 6.03 [5.02-7.04] and 13.70 [9.61-17.79] vs. 11.08 [7.74-15.92] months, respectively). Higher Performance Status (PS) was associated with worse survival measures over both periods, while no statistical significance was reached for OS in the latter period. Dissimilarities in PFS were observed between beneficiaries of different insurance trusts. Conclusion: Clinical outcomes for advanced lung cancer have not changed as a result of the financial crisis in our institution. The insurance provider seems to affect health outcomes. This old paradigm could serve as new guidance in the forthcoming recession due to COVID-19 pandemic.

Distributions to Beneficiaries of Tax-Favored Retirement Plans, before and after the Secure Act

Individual beneficiaries of tax-favored retirement plans have long enjoyed substantial tax deferral by spreading required minimum distributions (RMDs) over their lifetimes or life expectancies. Often referred to as “stretch” distributions, these extended RMDs attracted the attention of reformers who questioned whether the deferrals served the needs of retirees, or were merely estate planning tools. The result of that concern was the enactment of the SECURE Act of 2019 that significantly changed the treatment of retirement plan distributions to beneficiaries. The SECURE Act primarily targets non-annuity RMDs made to designated beneficiaries from tax-favored retirement plans that are defined contribution plans (but including IRAs). The SECURE Act eliminates life expectancy RMDs for many if not most of these beneficiaries and instead requires distribution of the entire amount of the retirement benefit before the end of the calendar year containing the tenth anniversary of the participant’s death (the ten-year rule). The SECURE Act, however, preserves life expectancy RMDs for “eligible” designated beneficiaries. Eligible designated beneficiaries (EDBs) include only (1) the surviving spouse of the participant, (2) a minor child of the participant, (3) a disabled individual, (4) a chronically ill individual, or (5) an individual who is not more than ten years younger than the participant. The determination of whether a designated beneficiary is an EDB is made as of the date of death of the participant. The SECURE Act also helpfully replaces the old five-year distribution rule with the ten-year rule, even for designated beneficiaries who are not EDBs, i.e., for those who are ineligible designated beneficiaries (IDBs). The ten-year rule also applies now to beneficiaries who succeed to plan benefits upon the death of an EDB. Unfortunately, though, beneficiaries who succeed to plan benefits upon the death of an IDB must still distribute all the remaining benefit within the same period that was applicable to the IDB. Beneficiaries that are so-called “see-through” trusts have long been afforded special RMD treatment. Now, however, the possibility of making life expectancy distributions to such a trust may be lost if any of the trust beneficiaries are IDBs. The SECURE Act partially addresses this problem by providing for “applicable multi-beneficiary trusts” that can allow a trust for a disabled or chronically ill beneficiary to still take RMDs over the beneficiary’s life expectancy. The SECURE Act also applies to commercial annuities purchased by tax-favored retirement plans that are defined contribution plans (including IRAs). These plans may now purchase lifetime and period certain annuities only for EDBs. Such annuities purchased for IDBs would normally conflict with the required application of the ten-year distribution rule. Fortunately, the SECURE Act does not apply to traditional defined benefit plans. Stretch annuities are still available under such plans even for IDBs. These annuities may provide unreduced payments for a period certain, and may allow significant increases over time in the amount of an annuity payment. It is true that joint and survivor annuity payments may be limited in amount for beneficiaries more than ten years younger than the deceased participant. Nevertheless, the payments may be as much as 52 percent of the payments to the participant for even the youngest of beneficiaries (with a higher percentage for older beneficiaries).

О субсидиарной ответственности бенефициаров офшорных компаний и трастов

О субсидиарной ответственности бенефициаров офшорных компаний и трастов

The double-edged sword of beneficiary consultation

Abstract Trustees are routinely faced with problems that need solutions, many of which are significant with no clear or easy resolution within reach. Both onshore and offshore, the Public Trustee v Cooper jurisdiction offers a helpful set of court-assisted solutions for a number of different types of issues encountered by trustees. But to what extent should beneficiaries of trusts be able to weave their way into the issue-resolution and decision-making processes, and just how far (and for how long) should the trustee remain engaged in that process? Recent decisions of the Cayman Islands courts offer some helpful guidance in this regard.

The rule in Saunders v Vautier: to the ‘residuary beneficiary’, the spoils?

Abstract The Royal Court of Guernsey was recently called upon to interpret Guernsey’s statutory incarnation of the rule in Saunders v Vautier in order to decide whether the sole beneficiary of a discretionary trust was entitled to collapse the trust and have the property distributed to it notwithstanding that, as a result of the trustee’s wide powers to appoint additional beneficiaries, it could be argued that the class of objects was not closed. The Royal Court held that the beneficiary could collapse the trust in those circumstances. This article considers the potential impact of this decision, particularly for ‘Red Cross’ trusts in Guernsey and beyond.

미국법상 신탁 선언을 통한 신탁의 설정과 수익자의 재량에 의한 신탁수익자 지정에 관한 소고

미국법상 신탁 선언을 통한 신탁의 설정과 수익자의 재량에 의한 신탁수익자 지정에 관한 소고

Commissioner of Stamp Duties (Queensland) v Livingston (1964): Rights of Estate Beneficiaries and Trust Beneficiaries Compared

The paper concerns a 1964 decision of the Privy Council, Commissioner of Stamp Duties (Queensland) v Livingston. It analyses the rights of estate beneficiaries and creditors against a deceased person's personal representatives and third parties during the administration of the deceased person's estate. It compares their rights with the rights of trust beneficiaries against trustees and third parties.

Tax treatment of foreign trust for Argentineans under the New Tax Reform

The last working day of 2017, a tax reform was published and entered into force. This tax reform amended, among others, the Income Tax Law and, in particular, included new rules for Argentine settlors and beneficiaries of foreign trusts. This is confirmation that Argentine recognizes foreign trusts that are correctly structured. The general rule is still that the local beneficiary should include in his tax return any payment made by the foreign trust during the fiscal year. Put differently, if there is no payment by the trust, there is no income for tax purposes. Tax Authorities challenged this tax treatment when they considered the trust was a sham. For example, in ruling Nr 9 of 2013, Argentine Tax Authorities established that the assets of a trust are not assets of the beneficiary until the moment of the actual distribution by the trustee to the beneficiary. Therefore, the beneficiary is not taxed over the trust assets. But, based on the economic reality principle (similar to the substance over form rule), Tax Authorities would consider that the trust assets belong to the beneficiary in case, the beneficiary has so much ‘decision power’ to control the assets as if he were the owner. Lawmakers had this criterion in mind when drafting and discussing the tax reform.

The express power to amend a trust deed where the trust beneficiaries have accepted the benefits reserved for them

The express power to amend a trust deed where the trust beneficiaries have accepted the benefits reserved for them

Of Piketty and Perpetuities

For the first time since independence, in a nation founded in large part on the rejection of a fixed nobility determined by birth and perpetuated by inheritance, America is paving the way for the creation of dynastic family wealth. Abolition or evisceration of the Rule Against Perpetuities in over half the states along with the likely repeal of the federal estate tax mean that there soon will be no obstacles to creating large pools of wealth that will insure lavish incomes to lucky heirs for generations without end. The timing of these legal changes could hardly be worse. Marshaling innovative economic data extending back centuries, Thomas Picketty convincingly argues that the relatively egalitarian incomes enjoyed in developed economies from the end of World War II until around 1980 were an aberration and that we are in the process of returning to the historical norm of much greater income and wealth inequality. The driving force is the return to a world in which the rate of return to capital (r) exceeds the growth rate of national income (g) — another historical norm temporarily abrogated during the 20th century. The wealthy hold an extremely high fraction of national wealth, and when returns to that wealth exceed the growth rate of national income, their relative economic power (and all that goes with that) increases proportionally. The main contribution of this article is, unhappily, to explore reasons that this revival of unending inherited wealth is of even greater concern than previously thought. First and foremost, the savings rate to a significant degree will be set by the dead hand control of those creating perpetual dynastic trust. In order to insure that trust assets keep up with income and beneficiary class growth, settlors will need to mandate very high savings rates for trust income. In the long term excessive savings (in excess of the “golden rule” savings rate), perhaps surprisingly, can actually retard the growth of consumption. In the shorter term, in a well-known phenomenon called the “paradox of thrift,” high savings rates can cause recessions, make them more severe, and increase their duration. Second, beneficiaries of dynastic trusts lack the power to dissipate the pools of family wealth that provide their high incomes. Prodigal children’s spending of principal is a powerful force for reducing inequality and increasing socioeconomic mobility. When not barred from doing so, descendants’ ability to sell trust assets to fund even more lavish lifestyles means that they will buy copious goods and services from those with lower incomes and less wealth. Thus perpetual dynastic family wealth thus imposes real social costs. This article recommends the conventional solution to such negative externalities: calibrated taxation of the anti-social behaviors. Instead of reinstating the Rule Against Perpetuities, this article instead suggests imposing perpetuities taxes on dynastic trusts with rates set, as closely as possible, to equal the costs imposed in terms of lower growth; more frequent and sharper business cycles; higher inequality; and lower socioeconomic mobility.

Права наследников бенефициаров офшорных компаний и трастов

The author researches the issues of rights of inheritance of heirs of beneficiaries of offshore companies and trusts in respect of property (assets) of the latter. These issues are of current interest in the light of using the services of nominee’s shareholders and directors of offshore companies which is widespread among Russian businessmen. Particular attention is paid to recognition of legal consequences of offshore testamentary trusts in civil law countries. These issues are also actual ones in the light of Russian laws on foreign controlled companies (CFC), which do not qualify irrevocable and discretionary trusts as CFC, and consequently such trusts are quite popular in Russia.
 One of the disadvantages of using the services of nominal shareholders by the beneficiary of offshore company is the unresolved rights of inheritance’s issues in case of beneficiary’s death. Consequently the Russian individuals who use the services of nominee shareholders in the offshore companies should protect their inheritance rights in case of unforeseen circumstances (e.g. death). Similarly in case of death of the trust beneficiary the fate of property transferred to the trust depends on the content of trust agreement, as well as of the trustee’s authorities. Therefore the fate of a trust and its assets in the event of beneficiary’s death should be determined in a trust agreement. The potential beneficiaries (in particular, the desirable heirs) should be familiar with the relevant trust documents.
 The author illustrates his reasoning by reference to legislation and case law of Russia and foreign countries. The author inter alia analyzes the issues of recognition of trusts created abroad, including under the Hague Convention on the Law Applicable to Trusts and on their Recognition of 1985.

Foreign Beneficiaries and Australian Trusts: Their Position Is Still No Clearer

In this article, the author examines the Australian legislation concerning the taxation of capital gains derived by foreign beneficiaries of Australian trusts. He challenges the Commissioner of Taxation’s approach of taxing capital gains derived by an Australian–resident trust from assets located abroad, which have no connection with Australia, and where the gains are distributed to non-resident beneficiaries, as contrary to the intent of the legislation. To resolve the situation, the article advocates further case law to give guidance on the availability of relief from capital gains tax for foreign beneficiaries of Australian trusts.