On Wednesdays (other than wearing pink) we’ll bring you a legal update so you can up your legal knowledge game.
Trusts usually run until their ‘vesting date’ which is the date upon which they terminate and the beneficial interest in the trust assets become fixed. Typically, the vesting date is 80 years from the date a trust is established. However, there may be instances when a trust is wound up before this vesting date. This may be due to a change in personal circumstance of the beneficiaries, the trust may have fulfilled its original purpose or the trust may no longer simply be needed/wanted.
Generally, there are 3 ways in which a trust may be wound up early. These are:
- A trustee revoking a trust.
- All the beneficiaries agree to wind up the trust.
- By Court order.
It’s important in points 1 and 2 above that a careful examination of the terms of the governing trust deed is conducted. This is because the trust deed may set out the necessary powers for a trustee to revoke a trust or the conditions for beneficiaries to consent to the winding up of the trust. Adequate records of the wind up process including distribution of trust assets and trust accounts (where necessary) should be kept by the trustee.