What is meant by the beneficiary principle?
The beneficiary principle is a policy of English trusts law, and trusts in Commonwealth jurisdictions, that trusts which do not have charitable objects, as under the UK Charities Act 2006 sections 2 and 3, and also do not make the trust property available for the benefit of defined people (i.e. beneficiaries), are void …
What are the two functions of the beneficiary principle?
The beneficiary principle thus supports the rule against inalienability by ensuring that there should be an identifiable beneficiary who will eventually take the legal title in the trust property and use the trust property in the wider economy.
What does Subtrust mean?
Subtrust means assets of a Separate Investment Account which are held by a Subtrustee pursuant to an agreement which the Investment Subcommittee has approved and directed the Trustee to enter into; Sample 2.
Can a trust have multiple Trustors?
Trusts in California can have multiple trustees, not limited to merely two. California trust law requires that co-trustees act unanimously. If the trust instrument provides that co-trustees do not have to act unanimously, the instrument controls. The trust instrument may allocate certain powers to specific trustees.
Is the beneficiary principle still relevant?
The beneficiary principle, as defined by Hudson, is still an important requirement of the law of trusts.
Why has the beneficiary principle been adopted?
In Morice v Bishop of Durham [1804] EWHC Ch J80 the Court of Appeal held that non-charitable purposes were void for want of objects. In this case the rationale behind the beneficiary principle was explained. The court stated that without certain objects, the trustees are not subjected to any obligations.
Can a trust have a Subtrust?
A sub-trust can protect trust assets from creditors. Additionally, a sub-trust can protect the trust assets from property division during a divorce. If the property is distributed directly to the beneficiary, it can inadvertently become marital property subject to division by the court.
Can a revocable trust have two grantors?
It is possible for a trust to have multiple grantors. If more than one person funded the trust, then they will each be treated as grantors in proportion to the value of the cash or property that they each provided to fund the trust.
What happens when two co-trustees disagree?
However, a serious conflict between co-trustees leads to a stand-still in the administration of the trust. In such cases, one or more co-trustees may seek to remove another co-trustee. The use of such court intervention is costly and hinders the effectuation of the trust’s purpose.
Do proponents of the human beneficiary principle misunderstand the fundamental principles of the trust concept?
Therefore, it is submitted that fundamentally, the trust concept cannot merely require an enforcer for reasons stated above; a human beneficiary is necessary and thus proponents of the principle do not misunderstand the trust concept.
Which case established the beneficiary principle?
In Morice v Bishop of Durham [1804] EWHC Ch J80 the Court of Appeal held that non-charitable purposes were void for want of objects. In this case the rationale behind the beneficiary principle was explained.
What is the difference between a beneficiary and a principal?
Beneficiary vs Principal – What’s the difference? is that beneficiary is holding some office or valuable possession, in subordination to another; holding under a feudal or other superior; having a dependent and secondary possession while principal is principal, main. is one who benefits or receives an advantage.
What is the beneficiary principle in family law?
The court held that there was a trust because the residuary legatee could enforce the trust. In essence, the beneficiary principle is that there must be identifiable objects of a trust, who can enforce the trust.
What happens if the principal is distributed to a trust beneficiary?
If the principal were distribution to a Trust beneficiary, then the Trust would not be able to generate income. For example, in the case of a dividend paying stock, once the stock is given to a beneficiary, the Trust will no longer receive dividend income from the stock. The income stops.
What are the exceptions to the beneficiary principle?
However, there are two specific exceptions to the beneficiary principle in relation to non-charitable private purpose trusts. The first is a trust for the creation or maintenance of tombs and monuments. This category is narrowly construed by the courts.