Family Trust in Australia

Issues: -

  • Which of the remaining descendants of the Late Lance Crenshaw will have the benefit of the Muirhead home unit and other benefits?
  • Possible issue of facts, law, doctrine, or principle that can be raised and propounded by each of the party based on the facts 

Relevant law Applicable: -

Family Trust in Australia.

Analysis: -

  1. A family trust is a trust which is created by one of the family members for the benefit of the other family members. It makes a distribution to the trust income or the other benefits only to the members who are part of the family or are within the family group. In the trust, the mother and the father are the Shareholders and the Children are the beneficiaries. So as per the application of the Australian Trust law, Suellen Morgan will be the proponent as she is given the probate of the will of her late mother, and the Opponent will be Richard Crenshaw, Katrina Crenshaw, and Lindsay Crenshaw who are the sole beneficiaries of the will of Richard Crenshaw.
  1. The different parties to the case are Suellen Morgan the daughter of Harriet, Gorge, Richard, Katrina, Lindsay, Roy Grant son of Lancelot cashew from his second marriage, the relationship between them ended, and got divorced in 1984. So as per the facts of the law, the different issues that would arise will be- who will be the beneficiaries of the late will, Suellen Morgan’s share in the property of late Mother Harriet Cashew and the other beneficiaries.

3In the following case, the nephew and niece of Suellen Morgan are the owner and beneficiaries of the will of Late Mother Harriet Crenshaw which will be their grandmother because as per the documents that were handed over by Richard, the documents had several letters attached and the letters were about the will of Lancelot Crenshaw. As per the letter dated 15 March 1976, the letter was written in respect of the purchase of a house at Muirhead in which he stated that he was short of some amount and asked for the same. As per the letter dated 30 June 1976, the title of the house or the house was purchased on George’s name. He was made the executor of the will be dated 12th June 1981. Since George did not show any interest in the property, on 2nd September 2004 Richard Crenshaw was the executor of the will and as per the affidavit dated 13th February 2005 all of the property was converted into money and distributed between Katrina and Lindsay Crenshaw as the Sole beneficiaries. In the case of re Scott, supreme court (SA) it has been Stated that the word trust specifically means the obligation that arises or rests upon the person who is appointed as the trustee.[1] So the parties which are most meritorious in the following Scenario are Katrina and Lindsay Crenshaw. George was not having any interest in the property of his late mother and father, so he made Richard the executor of the will. So According to the Concept of Trust Unit in Australia, the trust is created by the family member to benefit the other family members. It helps in protecting the assets and liabilities of one or more members from the other members. It also plants a mechanism as to how the family assets will be transferred to the other members of the future generation. It also serves many other benefits as to how it can stop other members from not challenging the will after the death of a senior member of the family. In the Whole situation when the letters and the other legal documents have transferred the name of the daughter was nowhere mentioned up, at the time when the property was transferred to George a later to Richard, No one anywhere implied the name of Suellen Morgan (nee Crenshaw )who was given the will of her late mother Harriet Crenshaw, who passed away on 28th December 2006. She was not aware that whether her mother owned any property or not. So, considering the whole situation, since she is not the part of the trustee and the beneficiaries, therefore, she has no right to claim from the property. As per the Letter dated 10th of April 1981, Harriet was the Sole Beneficiary of the entire state of her late husband. So Even if George was Appointed as the Executor of the will, the beneficiaries' right was being passed to Harriet. On the 2nd of September 2004, Richard was confirmed as the executor and his children as the beneficiaries. But at that time Harriet was alive and was the sole beneficiary. Therefore, the kids were not the beneficiary, the beneficiary was Harriet only and after her death, since Samuel was the executor of the will, therefore, she will be having the rights on the benefits of the property or the Assets that were owned at the time when the deceased was alive.

The trustee is considered as the person who is the legal owner of the Business, but he cannot benefit from the property. There are some obligations that the Trustee of the property owes to the Beneficiary of the property. These obligations constitute as the basic of a valid trust. The trustee only has the right to act for the benefit or profit of the beneficiaries. But the trustee is not under an obligation to let the beneficiary know that he or she has been appointed as the beneficiary of the property, it’s the duty of the beneficiary only to be aware that he or she has been appointed as the beneficiary. Therefore, George was not in an obligation to make aware Harriet that she has been appointed as the sole beneficiary, it was her duty to be aware as to the facts of the trust when it was handed over to George. The beneficiary has the right to ask the trustee about the benefits form the trustee’s property, and the trustee is under an obligation to answer to the Beneficiary, he cannot deny answering. In the case of Erceg v Erceg, it is held that if the trustee does not provide the correct information, and the beneficiary is not satisfied, the beneficiary can seek the assistance of the court.[2] The court in the following case also established what are the following requirements that have to be disclosed to the beneficiary. So, the disclosures that have to be made to the beneficiary are as follows: -

  • The type of interest that the Beneficiary prevail in the property;
  • What is the nature of the information that is enclosed whether it is commercial or personal in nature;
  • What are the intentions of the trustee or the settlor while making disclosures, are the intentions of the settlor positive or negative plays a very important role;
  • The trustee also keeps in mind the effect of the disclosure of information to the beneficiary, how the person would react;
  • The nature and the intention of the beneficiary are also considered;

The beneficiary of the property has the right to trust information about: -

  • The deed and the different type of deeds in relation;
  • Monetary details of the trust;
  • Contact details and the other type of personal details;
  • Details about the distribution of income, how the income was divided, and where is other money being utilized;

In the case of RE Londonderry’s Settlement the court emphasized on the on the features of a trust documents. So, the character stick as per the court are – they are in possession of the true owner or the trustee, they have the information about the trust and the beneficiary have the right to be informed about the information related to the trust, the beneficiary has the right to look over at the documents. [1] As per Schmidt v Rosewood Trust Ltd the beneficiaries do not have right as to disclosure of all the documents but for that purpose the beneficiary has the right to approach the court for the same.[2] A Beneficiary is even possessed with the right to review the decision that is taken up by the trustee, whether it is correct or not. The court if possessed with the inherent powers to look upon the decisions and the actions that are taken by the trustee, whether they are appropriate or not , or if it is related to the beneficiary also, the action possess some advantages to the beneficiary or not. Moreover if the trustee has settled or disposed of the property in the breach of trust or without letting the beneficiary know , the beneficiary has the right to re-claim the property from the trustee. The Beneficiary can approach the judiciary for the same.

  1. Out of the above discussion, Samuel has the right to approach the court as after her mother passed away, she was the beneficiary. But Richard did not hand her over the documents that he possessed and were related to the property of the Late Mother and Father. Harriet was the beneficiary of the property as per the Letter dated 10th October 1978 which clearly stated that the money that is derived or obtained from the house should be used by Harriet only and she will act as the sole beneficiary of the property. The letter dated 12th June 1981 also Confirmed that Harriet was the sole beneficiary of the entire estate of her husband. Richard despite having all the documents along with him, never disclosed the documents with Samuel, which is against the law of Family or unit trust in Australia.

Samuel mother was the beneficiary of the property as affidavit dates 14th May 1984, which was sworn by George for his divorce clearly stated that he was not having any beneficiary interest in the property, he was just the registered proprietor of the trust of Harriet but does not hold any beneficial interest. Therefore, when the property was transferred to Richard Dated 2nd September 2004, he was the executive of the property, he was not given the beneficiary rights by George after he passed away. The Beneficiary rights possessed Harriet only and later since Samuel was granted probate of her late mother Harriet Crenshaw who passed away so the Beneficiary also possesses with Suellen only. Richard was the executive of the property, but the beneficiary rights were of Suellen only. It was the duty and obligation of Richard to Disclose all the letters and the documents that he possessed, at the time when the property was transferred. Even if he sold the entire property and transferred the amount to Katrina Crenshaw and Lindsay Crenshaw, he was not legally entitled to dot the same. At the time when he sold off the property, the mother was alive she passed away in 2006, the property was sold off before only and she was not given any amount for the same for which she was legally entitled. Therefore Suellen being the beneficiary, she was legally entitled to the amount that was divided between Katrina and Lindsay and Richard, who was the executive of the trust after George Passed away was in an obligation to give the amount to Suellen that she received from after disposing of the asset of the Late brother George, on acting as the executive of the property after his death.

Conclusion:-

Since Suellen was not aware of the fact that her mother was a beneficiary and later she was one, Richard was in a legal obligation to compensate Suellen for the same. Suellen has the right to approach the court on account of breach of trust and on account of the fact that Richard did not tell him before about the Documents that he had which were related to the property and since he was appointed as the executive of the deed, it was his duty to inform Suellen about the same and grant her beneficiary right. Richard daughters were given all the amount after the property was disposed of amounting to $832,000 which legally they were not entitled to.

So, therefore, in the whole situation, Suellen has two option either she can approach both the daughters of Richard who are given the amount that was received from disposing of the property, of which they were not legally entitled to either to divide the amount into three parts and give one share to her. This process can be done or on the other side of the daughters do not agree to the same So Suellen had the right to approach the court on the ground that her mother was the sole beneficiary and later she was granted the rights, which made her the beneficiary of the property so he will be entitled to the amount. Suellen can sue Richard on account of not disclosing the trust information with her mother when she was alive and the assets of the deceased were disposed of. Richard was under a Legal obligation to do so, which he failed. Therefore, he is under a legal obligation to provide Suellen the amount that he received after disposing of the property as she was legally the owner of the benefits forms the property.

Bibliography for Suellen’s Errand Case Study

Acts , Laws and Statutes

Australian Law on Family trust or unit trust .

Case Laws

Re Scott [1948] SAStRp 11; [1948] SASR 193 (21 May 1948)

Erceg v Erceg [2017] NZSC 28.

In re Londonderry’s Settlement; Peat v Lady Walsh: CA 3 Nov 1964.

Schmidt v Rosewood Trust Ltd [2003] UKPC 26.

[1] In re Londonderry’s Settlement; Peat v Lady Walsh: CA 3 Nov 1964.

[2] Schmidt v Rosewood Trust Ltd [2003] UKPC 26.

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