Liechtenstein Trust | Beneficiaries | Rights | Duties | Order

The beneficiaries are those persons in whose favour the settlor established the trust or transferred the trust assets to the trustee.

Expertise

• Beneficiaries
• Appointment of beneficiaries
• Trust certificates
• Asset protection in bankruptcy and foreclosure
• Beneficiary rights and claims in the event of violation of rights

Beneficiaries

The group of beneficiaries includes all natural or legal persons or other legal entities that receive a present or future benefit from the trust, be it an object of the trust property or income from it, regardless of whether they have a legal claim or not.

Beneficiaries with a legal entitlement to the benefit have a direct, enforceable claim to the benefit.

However, the settlor can also leave the determination of the benefits and their amount to all or individual beneficiaries or beneficiary classes to the discretion of the trustee (beneficiaries without legal entitlement: discretionary trust beneficiaries).

In addition to the settlor, the trustee may also be a beneficiary. However, the trustee may not be the sole beneficiary.

Fiduciary status: Instead of granting benefits to specific or identifiable persons, the benefit can also be granted in favour of a specific purpose.

Prospective beneficiaries are not beneficiaries, but have a legal right to be appointed to this position as soon as beneficiaries cease to exist.

If no persons can be determined or identified or if they do not assume their position as beneficiary and if the purpose of the trust is not specified, it is assumed that the settlor is the beneficiary during his lifetime.

Appointment of beneficiaries

The beneficiaries or the trust purpose are determined directly or indirectly by the settlor in the trust deed. However, the beneficiaries can also be named in a separate document (“schedule”).

The settlor may attach conditions or requirements to the appointment of the beneficiaries. It may determine whether the beneficiaries’ claims are enforceable or not and to what extent the beneficiaries have a right to inspect the accounts or otherwise monitor the trust. It can also stipulate that the beneficiaries have no right to accounting or information from the trustee.

The settlor may impose conditions under which a beneficiary is to be replaced. He can also delegate all his rights in whole or in part to third parties (e.g. trustee or collator) and leave the execution of his instructions to the discretion of the trustee.

Trust certificates

In the trust deed, the settlor can also stipulate that trust certificates are to be issued to the beneficiaries as securities over the trust assets. The certificates give the beneficiaries a creditor’s right to the benefit of the trust assets.

The trust certificates must be registered and are transferable like registered shares. The trustee must keep a record of them in the same way as a share register.

Asset protection in the event of bankruptcy and foreclosure against beneficiaries

If the beneficiary goes bankrupt or if enforcement proceedings are initiated against him, the creditors only have a claim against the trust property if the beneficiary also has a claim against the trust property.

This is only possible for beneficiaries with a direct legal claim and only to the extent that the beneficiary has concrete claims at the relevant time.

Beneficiary rights and claims in the event of violation of rights

The beneficiaries are entitled to rights vis-à-vis the trustee and third parties by virtue of their status as beneficiaries. The relevant statutory provisions are dispositive, meaning that the trust deed is ultimately decisive. The settlor regulates the type, scope and enforceability of the beneficiary claims in the trust deed.

In principle, the beneficiaries have the following rights, subject to any other provisions in the trust deed:

You can take legal action against the trustee’s orders and administrative actions in court.

They have a right to accounting and information if no auditors are appointed or if the settlor is deceased or unavailable.

The beneficiaries do not have dispositive protection mechanisms against the trustee violating the beneficiaries’ rights:

The trustee is liable to the beneficiaries personally and with all his assets in the event of a culpable breach of the beneficiaries’ rights.

Third parties not acting in good faith are liable to compensate the beneficiaries for the damage.

An unlawfully sold part of the trust assets can be reclaimed from  the third-party acquirer if the latter was aware that it belonged to the trust assets.

If the third party has acquired trust property for a reasonable fee, he is not obliged to surrender it. However, the beneficiary may recover his losses from the trustee.