There are a variety of forms of trusts, bare trusts, unit trusts, hybrid trusts, discretionary trusts, fixed trusts, resulting trusts or constructive trusts.

An express trust is a trust which has been intentionally created.

A non-express trust is a trust which has not been intentionally created but has arisen as a result of a particular circumstance or in some instances a particular action.

A trust, whether express or non-express is complex however it can best be described as a relationship between a number of people, in which an individual or entity hold a person’s property on behalf of another and for that person’s benefit.

Each trust gives rise to an equitable interest and is a form of an agreement between the beneficiary and trustee.

The Trustee of a Trust has a range of fiduciary obligations with the intention that the Trustee at all times acts in the best interest of the trust, the beneficiaries, carries out the purpose of the trust and puts all trust duties and obligations above their own self-interest.

A Trustee is in a position of trust and confidence and their conduct is governed by their fiduciary obligations and statutory provisions.

If a trust holds assets, it is the trustee who holds the legal title of the asset on behalf of the beneficiaries. The beneficiaries thereby have an equitable interest in the asset of the trust.

If a trustee breaches their fiduciary duties and/or statutory obligations, the beneficiaries of that trust can commence court proceedings in the equity division of the Court’s to obtain remedies to rectify the breach or breaches of the trustee.

Such remedies can include:

  • Equitable compensation
  • Account of profits
  • Tracing
  • Remedial constructive trust
  • Institutional Constructive Trust

Equitable compensation is a form of damages. A beneficiary of a trust can seek equitable compensation for any/all loss suffered as a result of the Trustee’s breach.

An account of Profits is a further form of damages which can be sought when the Trustee has gained a benefit in breach of their obligations as trustee.

The remedy of tracing can be sought when the trustee has wrongfully disposed of trust assets. The beneficiaries can seek an order that any assets obtained by the trustee by use of the trust assets for their personal gain, can be transferred to the beneficiaries or a charge can be placed on the asset acquired by the trustee through use of trust assets.

A remedial constructive trust is the creation of a new trust to remedy the wrong committed. An order is made that the trustee holds any property/asset acquired by them, through the use of the original trust assets, on trust for the benefit of the beneficiaries.

An institutional constructive trust is the creation of a new trust where the “wrongdoer” is a fiduciary (examples of fiduciaries are company directors, business/investment partners, attorneys under a power of attorney, person entrusted with obligations of trust etc.) to reinstate the person’s rights as if the wrong had not been committed. An order is made that the trustee holds any property/asset for the beneficiary from the date that the breach of the fiduciary duty occurred and the court does not have the discretion deny the beneficiary the remedy under traditional equitable principles such as delay, clean hands etc.

It is important to note that if the rules of trust are not strictly complied with, the trust can be “busted” open by creditors of a beneficiary of the trust and/or a beneficiary’s trustee in bankruptcy.

Antunes Lawyers have extensive experience in establishing trusts, advising on trusts, advising on how to operate trusts, advising on what not to do to expose trust assets to risk, in addition to prosecuting and defending trust litigation.

If you wish to establish a trust, if you have a dispute over a trust, if you are of the opinion that the trustee of your trust is not acting in your best interest or that of the trust, or if you have suffered loss at the hands of someone who was “trusted” to perform certain “obligations” and who has failed to act in the way they were entrusted to act, speak to one of our Trust and litigation lawyers today.

Talk to one of our expert lawyers today.