Who is a Beneficiary?
The Trust and Trustees Act defines a beneficiary as a person entitled to benefit under a trust or in whose favour a discretion to distribute property held in trust may be exercised.
In order for a person to be entitled to benefit under a trust, he must be (i) identifiable by name; or (ii) ascertainable by reference to a class or to a relationship to some person. This allows for the possibility of persons not yet conceived to be named as beneficiaries or form party of a class of beneficiaries. However, in such case, their rights do not arise until they are born.
A trust deed may be drafted in a manner to allow for the addition and exclusion of beneficiaries during the trust period. This power may also be granted to the trustees by the settlor in writing. The trustee may also be given the discretion as to which beneficiaries are to benefit, the quantity of any benefit, and the time and manner in which beneficiaries are to benefit.
The Trust and Trustees Act also allows for a settlor to be a beneficiary under the trust.
Rights of the Beneficiary
Right to be Informed of Beneficial Interest
The trustee shall inform any beneficiary of his interest under the trust within a reasonable time, unless the trust deed expressly determines the time when beneficiaries are to be informed of their beneficial interest under the trust.
Right to Enjoy the Beneficial Interest
A beneficiary is entitled to enjoy the beneficial interest in the trust property subject to law and the terms of the trust deed. This beneficial interest is personal to the beneficiary and cannot be transmitted by inheritance, except as provided for in the trust deed.
The beneficial interest of a beneficiary is considered to be movable property by law, even if the trust assets consist of immovable property.
Right to Transfer Beneficial Interest
The trust deed may allow the beneficiaries to sell, charge, transfer or otherwise deal with their interest in any manner.
Right to Information
The trustee shall provide full and accurate information as to the state and amount of the trust property at the request of any beneficiary of the trust, unless the trust deed expressly prohibits notification of information to beneficiaries until a point in time.
Right to Request Accounts
Trustees are to disclose accurate accounts and records of their trusteeship upon the request of any beneficiary. Furthermore, subject to the terms of the trust, they are to provide a copy of such accounts within a reasonable time.
Right to Benefit from Fiduciary Obligations of the Trustee and Other Persons
The trust assets are held and managed by the trustee for the benefit of the beneficiaries. Therefore, the trustee owes fiduciary duties to the beneficiaries of a trust. In fact, the law expressly provides that trustees are to exercise their powers in the best interest of the beneficiaries.
Even where there is no trustee in place, the law obliges all persons in control of trust property to preserve the trust assets and binds them by fiduciary obligations towards the beneficiaries.
Where the trustee is in breach of these duties, he shall become liable for (i) the loss of depreciation in value of the trust property resulting from the breach, and (ii) the profit, if any, which would have accrued to the trust if there had been no such breach.
Right to Disclaim Interest
A beneficiary may disclaim his whole interest in the trust, whether or not he has yet received any benefit from his interest. Once such a declaration is made, it becomes irrevocable. A beneficiary also has the option to disclaim only part of his interest, in which case it can be stipulated that such declaration be revocable.
For more information please do no hesitate to contact us on info@premier-fiduciary.com.mt
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