Winding up a trust

Trusts Discussion
1

We have one of three beneficiaries on winding up of a discretionary trust refusing to accept and sign trust accounts to enable the trustees to be discharged and are interested to know how others have resolved this situation
Andrew Laing
BBW solicitors

1 Like
2

I am surprised that you require the beneficiaries to approve trust accounts, especially discretionary ones.
It is the trustees duty and responsibility to do that.
Or do you mean they are refusing to sign the Deed of advancement or appointment?
If the latter then they presumably don’t want whatever the trustees are intending to distribute by exercise of their discretion and so it should be re appropriated?

Maxine Higgins
Citroen Wells

3

I agree the process starts by the trustees approving the accounts .

But my reading of Underhill is that on completion of trusteeship a trustee is entitled to have the trust accounts ‘examined and settled by the beneficiaries ‘ and to be given a formal discharge so that is where I am coming from ; much like completion of administration of an estate .

There is no rejection of the appointment by the beneficiary .

The trust will be at an end once this distribution is concluded .

Andrew Laing

BBW

4

In my experience (as an accountant), and we have used a variety of legal firms to assist us when winding up trusts, this is all dealt with in the final Deed of Advancement/Termination/Appointment (whatever) together with an indemnity for the former trustees - that is signed by the various beneficiaries as part of the distribution - if they are not prepared to discharge and indemnify the former trustees then they probably shouldn’t benefit? By accepting the appointment they have effectively agreed to the formal discharge - has this been fully explained to them?
What are their grounds for objection?

Maxine Higgins
Citroen Wells

5

From an offshore perspective the final appointment starts with a deed of appointment and indemnity. The trustees prepare accounts and make them available to beneficiaries which starts the prescription period running. We can’t hold beneficiaries to ransom by withholding a distribution until they have “approved” our trusteeship. Either we have committed a breach of trust or we haven’t. That isn’t altered by anyone approving our accounts. I don’t think I have ever asked a beneficiary to “approve” the trustee accounts.

The indemnity will indemnify us for anything for which we would be exonerated by the terms of the trust. Nothing more, nothing less.

Tony Pitcher
Napoleon 19