Testamentary Trusts Research Articles

Trustee powers—observations from Australia

Abstract Much of the current and future intergenerational wealth transfers in Australia is and will be through discretionary family trust structures and testamentary trusts. The number of disputes in relation to the administration of these trusts will very likely increase. This article provides a general overview of some specific aspects of trust administration and trustee powers and obligations in Australia, including adding and removing beneficiaries, decanting trust assets, provision of information to beneficiaries, fettering of discretions and avoiding or resolving disputes in relation to the exercise of those powers.

Cyprus international trusts as a legal arrangement that is immune to forced heirship claims

Abstract The portions of a deceased’s estate that can effectively be passed to surviving family members depend largely on the laws and regulations of each jurisdiction coupled with applicable EU Regulations and international conventions. Succession laws, wills and trusts, may face the challenges of forced heirship provisions that one may attempt to bypass by creating an inter vivos or testamentary trust, but which carry the risk of being disputed. Cyprus trust law does not recognise forced heirship claims against trust assets. The law relating to inheritance or succession in Cyprus or in any other country does not in any way affect any transfer or disposition of assets to a Cyprus International Trust or the validity of the trust.

Forced Heirship and Trust

In South Korea, there is an academic dispute whether an asset transferred to a trust could be clawed back based on the claimant’s forced heirship and, if the answer is positive, in which shape this claw-back would take place. The author of this article tries to give a comparative overview as to this question, analyzing American, English, Swiss, French and German law. Hereby he observes what follows. (1) The claw-back is overall granted. (2) The revocability of trust plays a crucial role to determine the shape of this claw-back. (3) The forced heirship or comparable right guarantees that the claimant demands his or her share from the trust’s capital. The author thinks these insights should be respected when one applies the Korean Civil Code. This means what follows. (1) The claw-back should be granted. (2) The trust in lieu of will (revocable trust) whose life-time interest is vested upon the settlor should be treated as donation inter vivos which takes effect at the settlor s death. The claw-back is to be raised against the trustee or beneficiary into whom the trust’s capital flowed. (3) The testamentary trust should be treated as legacy, the irrevocable living trust as donation inter vivos which takes effect at its settlement. The claw-back is also to be raised against the trustee or beneficiary into whom the trust’s capital flowed.

The problems of legal regulation of the procedure for creating testamentary trust

The institution of testamentary trust, which was Introduced as a result of the 2018 Russian inheritance law reform  and updated with the amendments to the Civil Code of the Russian Federation coming into force in March 2022, aims to ensure the efficient and lossless succession of assets by Russian citizens. The question is raised whether the current regulation of norms describing the process of incorporation meets the criteria of reasonableness and is it capable to mediate the uninterrupted transfer of the mass of succession from the control of the deceased testator to the testamentary trust. The examination of all technical legal procedures related to the emergence of a new heir allows assessing the immediacy of succession by the testamentary trust, detecting the existing flaws in legal regulation that complicate the implementation of rights and legitimate interests of the testator and beneficiaries of the testamentary trust. There are currently no scientific research dedicated to the procedure for establishing testamentary trust from the perspective of practical implementation of all stages of this process. The scientific novelty is substantiated by the absence of law enforcement practice; the testamentary trusts are not duly registered in the Russian Federation. In conclusion, the author indicates the complicated regulation of the capability of the notary to comply with the shortest terms set for the creation of testamentary trust. The author also believe that the requirement for the filing order of receiving the affidavit of heirship by the testamentary trust is unnecessary.

Estate Planning and Wills Across Borders: Sometimes a Quagmire in the Making

In this article a synoptic evaluation is made in respect of the estate planning and wills of South African nationals working, investing or living in foreign jurisdictions, in the broader context of globalisation and internationalisation. Estate planners and testators may inadvertently leave family members in a financially vulnerable position or diminish family assets due to a non-appreciation of international private law. The importance of international wills, the role of testamentary trusts, and the potential impact and reciprocity of international instruments are considered. The most applicable Hague Conventions and the EU Succession and Matrimonial Property Regulations are discussed in an attempt to give an overview of the current legal position. In discussing the role of international private law, its practical application is illustrated by way of reference to a few jurisdictions popular among South Africans with multi-jurisdictional estates, namely Malta, Portugal, the Netherlands and the United Kingdom. Although there may be more popular emigration jurisdictions amongst South Africans, this contribution focusses on the South African who lives, works and plays in a European context, without necessarily cutting his or her ties with the homeland. Not all attempts to harmonise wills, deceased estates, succession and matrimonial property regimes have been met with the same levels of enthusiasm by the international community. Contributing hereto may be the fact that fiduciary law deals with sensitive and very personal aspects of individuals and is closely linked to the different worldviews of communities. It is argued that not only fiduciary advisers and will drafters, but also attorneys and notaries involved with prenuptial agreements, should be proficient in the workings and implications of the applicable international instruments. Lastly, an argument is made for more pragmatic and commercial style thinking in the arena of fiduciary law.

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 />

Legal Status and Establishment Direction of the Purpose Trust in the Revised Trust Act

A trust can create an independent property called trust fund for private interests. Trusts are very special in that they can be created solely for the public interest, such as public interest trusts and foundations under the current law, especially for purpose trusts without beneficiaries. Until now, there has been little discussion in Korea and the purpose trust has been introduced into the revised law, which is still unfamiliar. But there is a problem that it is not clear what status it has in the legal system of the trust law only with the provisions of the revised law. Among them, purpose trusts without beneficiaries are even more so. These Purpose trusts are mainly used in foreign countries for financial transactions related to tax avoidance and for the breeding of pets after the owner s death. It seems that the Korean law will also attempt to explore the possibility of using it in various fields such as species. However, in order to increase the possibility of using the purpose trust, the direction of the establishment of the purpose trust through review of problems such as the trust caretaker s problem, the limitation of the duration of the purpose trust, the taxation problem under the tax law, and the relationship with the legal portio of an heir, and presenting an amendment thereto. ① In the case of a purpose trust, there should be a separate provision for compulsory appointment of a trust manager. In other words, in Article 67 of the Trust Act, “When establishing a purpose trust in ①-2, the court shall appoint a trust manager ex officio. However, if a trust manager is designated as a trust act, it shall be followed.” ② Article 69 (2) of the Trust Act shall be deemed “a trust administrator has the same status as a beneficiary in a trust. However, Articles 56, 100 and 101 (1) do not apply to the trust manager of the purpose trust.” ③ In a purpose trust that is a testamentary trust, it is necessary to stipulate that the authority of the trustee cannot be limited by changing the trust as in the case of Japan.

The place of the notary institution in the doctrine of the probate law in Ukraine: theoretical aspect

The author studies some theoretical and practical issues of the notary system in the national legal doctrine of the probate law. It has been determined that the notary system plays an important part in regulating economic relations, provides steadiness and security in behaviour of participants of civil and hereditary relations, facilitates the decrease in the number of violations and eliminates objective conditions of their commission. This requires some scientific analysis of the basic issues, among which the important place is taken by the issues of notary activities in the legal regulation of hereditary relationships in Ukraine. In this connection grows the significance of studying the place of the notary institution in the doctrine of probate law in Ukraine. Therefore, the author studies social relationships that arise in the context of notary activities, as well as the ones in connection with notarial acts between a notary public and testator (heir) and also between a notary public and state bodies. Taking into consideration the modern realities, the conditions of using more strengthened notary potential should be created in the sphere of protection of civil rights and interests of both natural and legal entities with the purpose of building up a civil society of the country. The notary institution may play a significant part in the judiciary reform in Ukraine as the solution of one of the main problems in judicial activity, i.e. consideration of all cases in a court judges’ jurisdiction, is impossible without decreasing the their workload. So, the important is the development of pre-court civil jurisdiction, where a more complete use of the positive potential of the notary institution in the sphere of the civil and probate laws belongs to. In this context, the international experience demonstrates that certain regulations of the probate law in EU countries could be taken into account in the notary activities considering the issues of heirdom, as there are some problems in the legal mechanism of probate law realization in Ukraine. The author analyses some novelties of the probate law in the country in accordance with the Civil Code of Ukraine (2003). The most novel are some provisions as to the forms of testament, secret will, spousal testamentary trust, probate contract, five determined categories of heirs-at-law, protection and management of inheritable property as well. The modern trends of the probate law are considered within the framework of the national legislation adaptation to the EU law. Attention is drawn to a number of existing problems in the sphere of notary activity, elimination of which will not only help to provide inheritance rights, but also to successfully realize judicial reform in Ukraine. Key words: notary system, notary activity, reform of the notary activity, probate law, testator, heir, doctrine of probate law.

Testamentary trusts and capricious testators

Abstract The notion that a trust may fail because it serves no useful purpose, or reflects merely the whim or fancy of the testator, seems to fly in the face of testamentary freedom and, in particular, the testator’s right to dispose of his estate in whatever manner he chooses subject only to the court’s control over illegal or immoral conditions and the making of reasonable financial provision for his family and dependants. So how have the courts grappled with these two competing aspects of public policy? The tension between these two competing aspects of public policy forms the subject matter of this article.

The Law of Trusts and Collective Action: A New Approach to Property Deadlocks

This Article identifies the key role that trust law can play in resolving collective action problems pertaining to assets with multiple stakeholders. Devising a multi-beneficiary trust may serve as an effective institutional alternative, when the direct governance of an asset by its co-owners reaches a deadlock, and the partition of the asset among them is either impractical or inefficient. The Article examines various case studies in which property may become deadlocked among multiple stakeholders, featuring either commons or anti-commons problems. In the case of land, the need to assemble land from multiple owners for (re)development, or the task of governing common properties in residential associations, may be prone to such deadlocks. In the case of intellectual property, such as in governing the copyrighted repertoire of a prominent musician posthumously, partition of copyrights to specific pieces of work among multiple heirs may prove inefficient and damaging to the artist’s legacy. The same may also apply to tangible goods that have a particular value when part of a collection, such as certain artworks or cultural artifacts. Jurisprudence on trusts focuses on the scope of fiduciary duties owed by a trustee to the trust’s beneficiary, with the question of multiple beneficiaries usually arising in the specific context of an inter-generational trust. This body of law can also be utilized, however, to address scenarios of contemporaneous multiple beneficiaries. Somewhat like a corporation, the trust employs legal mechanisms to govern a distinct pool of assets, while dealing with competing or conflicting claims both among beneficial owners and vis-a-vis third parties. The trust can thus serve as an alternative for deadlocked property when an ex ante or ex post incorporation of assets is unfeasible or inappropriate, and is less intrusive than other solutions, such as eminent domain. Unveiling the potential of multi-beneficiary trusts for governing deadlocked property may call for incentivizing the voluntary establishment of inter vivos or testamentary trusts. But it can also prompt the creation of statutory mechanisms that would grant courts the discretionary power to establish trusts ex lege to resolve a persisting deadlock, at least for a specific period of time or for the execution of a certain project. This Article further argues that turning co-owners into co-beneficiaries in such a statutory trust should not be considered a taking of property.

Estate planning beyond the grave: legal instruments comparable to testamentary trusts in Estonian law

Estate planning beyond the grave: legal instruments comparable to testamentary trusts in Estonian law

A Will for Willa Cather

Artists hold their creative works dear: whether paintings, poems, or songs, their human creators treat them with special care and often desire that same care be exercised after death. Directing particular uses of property from the grave can be met with several objections. The objections sound in alarmist responses to “dead hand control” and include the Rule Against Perpetuities, uncertainty, capriciousness, and the repugnancy of restraints on alienation.This Article considers these and other recurring objections in one particular context and with one particular variety of creative works: an author’s unpublished and private letters to her friends. A mechanism for achieving an artist’s restrictions over the use of her creative works after death is introduced in the form of a purpose trust. Purpose trusts are typically utilized by pet owners to ensure the continued care and preservation of their pets after the owner’s death. Purpose trusts are unique in that they lack ascertainable beneficiaries to enforce the trustee’s duties. Many purpose trusts do not qualify as charitable trusts (which can be enforced by the state attorney general’s office). Instead, a private “enforcer” must be provided. Here, a noncharitable purpose trust designed to restrict access to an author’s private correspondence is introduced; a testamentary trust hypothetically created under the terms of the Last Will and Testament of the celebrated American author Willa Cather.

The Testamentary Trust: Is it a Trust or a Will? Hanekom v Voigt 2016 1 SA 416 (WCC)

The recent judgment in Hanekom v Voigt 2016 1 SA 416 (WCC) is evaluated in the light of the traditional understanding of the testamentary trust. It is evaluated from both a testamentary disposition and a trust law perspective, with the aim of determining whether the Hanekom matter has touched a particular nerve in the will versus trust debate as far as the trust mortis causa is concerned. From this judgment, the importance of differentiating between the spheres of testamentary law and trust law, to ensure legal certainty, became clear. The court submitted that the mere fact that a trust happens to be of testamentary origin should not influence the evaluation of the validity of the amendment of the trust instrument. The court underlined the dynamic nature of the trust figure in referring to it as a "supple, living institution." The nature of the powers vested in the Master of the High Court, both as far as the appraisal of the trust instrument and the appointment of trustees are concerned, is also considered in the judgement. In evaluating the facts of the case, the court recognised the applicability of the Oudekraal principle as it has been developed in the field of administrative law. The writer comes to the conclusion that, while the Hanekom case does illustrate some legal challenges in the last will and testament environment, it also offers a number of valuable lessons for will-drafters. The approach by the court is encouraging, as it shows some sensitivity for the true nature of the testamentary trust. The confirmation by the court that a testamentary trust is in the first instance a trust and not a will per se is to be welcomed, and is a true and realistic reflection of the nature of the institution.
 

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.

Inter vivos Hekdesh versus testamentary trusts and foundations

Inter vivos Hekdesh versus testamentary trusts and foundations

Trusts in disguise—accurately identifying equitable interests

This article examines common mistakes in practice when dealing with trusts, in particular: In deceased estates where a testamentary trust has not been created under an will; Where a family discretionary trust is, in reality, a bare trust. That is, where the entitlement of a beneficiary to income, corpus or both is determined by the trustee exercising a power to make that selection from time to time; and Where the trust is a sham.

In re Robert Palmer's estate: X et al. v. Y, First Civil Chamber, Court of Appeal of Ticino, 19 December 2007

This is the first trust case rendered in Switzerland after the ratification of the Hague Trust Convention, which came into force on 1 July 2007 (Judgment of the Court of Appeal of Ticino of 19 December 2007 (11.2004.49)). This case deals with trust litigation in connection with the estate of Robert Palmer, the British pop singer. It examines whether there is a conflict of interest in simultaneously acting as executor of an estate and as trustee of a testamentary trust and highlights the differences between the executor of an estate and a court-appointed administrator in a civil law jurisdiction.

Property Law. Rule against Perpetuities. Use of Cy Pres Doctrine to Reform Testamentary Trust Violating The Rule against Perpetuities. In re Chun Quan Yee Hop, 469 P. 2d 183 (Hawaii 1970)

Property Law. Rule against Perpetuities. Use of Cy Pres Doctrine to Reform Testamentary Trust Violating The Rule against Perpetuities. In re Chun Quan Yee Hop, 469 P. 2d 183 (Hawaii 1970)

Federal Procedure. Stockholders' Suit. Single Beneficiary of Testamentary Trust Containing Corporate Stock Cannot Maintain Shareholder's Secondary Action under Rule 23(b) When Other Beneficiaries Cannot Be Joined

Federal Procedure. Stockholders' Suit. Single Beneficiary of Testamentary Trust Containing Corporate Stock Cannot Maintain Shareholder's Secondary Action under Rule 23(b) When Other Beneficiaries Cannot Be Joined

Trusts. Creation and Validity. "Pour over" Trust Provision in Will Held Not to Create Testamentary Trust

Trusts. Creation and Validity. "Pour over" Trust Provision in Will Held Not to Create Testamentary Trust