Missing Beneficiaries: The Importance Of Making Well Documented Inquiries

• Published date: 18 November 2021
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Family and Matrimonial, Financial Services, Fund Management/ REITs, Corporate and Company Law, Trusts, Wills/ Intestacy/ Estate Planning
• Law Firm: Conyers
• Author: Mr Robert Lindley and Wesley O'Brien

Robert Lindley and Wesley O'Brien provide a step-by-step guide to dealing with missing or uncooperative beneficiaries.

It will be important for the trustee to be capable of demonstrating that it has made sufficient reasonable efforts to find and/or contact the relevant person.

Trusts exist for the benefit of their beneficiaries and it is to beneficiaries whom trustees owe their duties. Whether the beneficiaries have a fixed interest or not, trustees owe their duties to the beneficiaries as a whole and trustees are therefore placed in a challenging predicament when beneficiaries cannot be located. While it sounds highly unusual, it is not altogether uncommon for executors of deceased estates and even for professional trustees to find themselves administering a trust or estate, but unable to distribute to one or more of the primary beneficiaries, because such person cannot be located or is unwilling to communicate with the trustee, meaning that the trustee cannot obtain a valid receipt and discharge.

It goes without saying that a trustee is not relieved of its duties simply because of difficulties finding, or communicating with, one or more of the beneficiaries of a trust. However, this means that trustees face complicated questions as to how best to discharge their duties when a trust cannot be administered and distributed in the manner envisioned by its governing documents and/or its settlor. Where a beneficiary subsequently comes out of the woodwork or has a change of heart, the manner in which the trustee has administered the trust in the intervening period could well come under the microscope and the trustee may be vulnerable to a breach of trust claim.

However, as is illustrated in the case law, '[trustees] should not be discouraged from seeking practical solutions to difficult administration problems' (Re Evans; Evans v Westcombe [1999]).

While there are few more difficult administration problems than missing and uncooperative beneficiaries, the aim of this article is to provide a guide to the various practical solutions which can assist trustees and executors. While the focus is on missing and uncooperative beneficiaries, similar principles are applicable in any circumstance where trustees cannot distribute a trust as was originally envisioned by the settlor/testator. As always, the appropriate solution will turn on the circumstances of the matter and the specific terms of the trust deed. However, there are some general rules and guidance which can be followed, arising both from the case law and practice.

Step 1: Fact-finding

Somewhat obviously, the initial step is to make efforts to contact and/or locate the missing or uncooperative beneficiary. Trustees should engage in a relatively thorough and extensive search in this regard, carefully reviewing their own files, contacting relevant people, searching online as well as on social media, advertising in relevant publications and hiring the services of a private investigator (where...