Review of laws relating to beneficiaries of trusts

Report

Report 144 (PDF, 692.0 KB) - Laws Relating to beneficiaries of trusts [PDF, 691Kb]

Tabled in Parliament on 31 July 2018.

Legislative action: Justice Legislation Amendment Act (No 2) 2019 (NSW)

Other documents

Consultation Paper 19 (PDF, 4.0 MB)

Background material

Submissions

Submissions

Preliminary submissions

Terms of reference

Reference received:  28 April 2017

Pursuant to section 10 of the Law Reform Commission Act 1967, the NSW Law Reform Commission is asked to review certain aspects of the law of trusts in NSW and report on whether:

• there is a need to enact statutory provisions to limit the circumstances if any in which the beneficiaries of trusts, as beneficiaries, should be liable to indemnify the trustee or creditors of the trust, if the trustee fails to satisfy obligations of the trust, or remove such liability
• it is appropriate for the liability of investors in unit trusts to be limited to the amount (if any) unpaid on their units in the same way that the liability of investors in shares is limited to the amount (if any) unpaid on their shares.

As part of this review, the Commission is to have regard to:

• the perceived uncertainty of the case law on the liability of trust beneficiaries in New South Wales and elsewhere
• the widespread use of trusts in commercial contexts as well as in the community generally
• the need for safeguards to ensure that any legislation limiting or removing such liability does not support the avoidance of responsibility for insolvent trading.

The Commission is also asked:

• to propose the terms in which any legislation should be enacted, and 
• to consult and report on whether New South Wales should adopt the recommendations of the Report, Trading Trusts - Oppression Remedies, January 2015, of the Victorian Law Reform Commission.