¶ 801
Overview
Purpose of the chapter. This chapter examines the position of the beneficiary of a trust governed by the law of Belize. It asks who may be a beneficiary, what kind of interest a beneficiary holds, how the terms of a trust may protect that interest from the beneficiary's own creditors, what information a beneficiary may obtain, how beneficiaries may disclaim, release, end or vary their interests, what remedies they have against a trustee and how the claims of a beneficiary's creditors, spouse and heirs are treated. The chapter closes with the reporting rules that apply to beneficiaries who are United States persons and with points of drafting. Chapter 6 deals with the creation and registration of a trust (see supra ch. 6), and chapter 7 with the trustee's appointment, powers and duties (see supra ch. 7). This chapter takes the same statute from the other side of the relationship.
The statutory provisions. The provisions that matter most are in Part II of the Trusts Act, headed "The Settlor, Beneficiaries and Purposes of a Trust." Section 10 provides for the identification of beneficiaries, for their addition and exclusion and for class gifts and disclaimers. Section 11 defines the nature of a beneficial interest. Section 12 authorises protective and spendthrift trusts. Section 13 provides for letters of wishes. Trusts Act, Cap. 202, ss. 10–13 (rev. ed. 2020). Other provisions are spread through the Act: the definition of "beneficiary" in section 67, the trustee's information duty in section 28 as substituted in 2023, termination by the beneficiaries in section 47, variation by the court in section 48, and the remedies and limitation rules in Part VII. Id. ss. 28, 47–48, 50–56, 67; Trusts (Amendment) Act, 2023, No. 40 of 2023, s. 3.
The text used. Section references are to the Revised Edition 2020 of the Act, as amended by the Trusts (Amendment) Act, 2023 (see supra ¶ 501.02). Where the 2023 Act substituted a provision, the chapter quotes the substituted text. The research notes for the chapter record which provisions were read in the primary text and which points rest on other sources.
Three themes. Three themes run through the chapter. The first is the breadth of the class of persons who may benefit. The Act treats as a beneficiary any person "in whose favour a power to distribute trust property may be exercised," so the object of a discretionary power is a beneficiary for the purposes of the Act, with the rights the Act gives beneficiaries. Trusts Act, Cap. 202, s. 67(1). The second is the protection of the beneficial interest. Section 12 allows the terms of a trust to make an interest terminable, inalienable or forfeitable on the beneficiary's insolvency, and abolishes any rule that would prevent a settlor from being a beneficiary of a protective trust he creates. Id. s. 12(1), (4). The third is the balance between confidentiality and accountability. The Act keeps trust information confidential, protects the trustee's deliberations and lets the trust instrument limit a beneficiary's right to information, while the 2023 amendments add new record-keeping and reporting duties and a short deadline for answering requests. Id. s. 28(1)–(3), as amended.
The settlor as beneficiary. The position of the settlor who is also a beneficiary deserves separate mention because it is the usual position in an asset protection trust. The Act allows the settlor to be a trustee, a beneficiary or a protector. Id. s. 9(2). Section 12(4) removes the common law objection to a self-settled protective trust. Section 7(6)(c), read with the inclusive definition of "insolvency" in section 67, directs the Belize court not to recognise foreign claims of creditors in an insolvency against the property of a Belize trust (see infra ¶ 840; ch. 11). The chapter keeps the two protections apart. Section 12 governs what the terms of the trust do to a beneficiary's interest when that beneficiary's creditors act. Section 7 governs whether a Belize court will give effect to a foreign law or order directed at the trust property.
Case law. No reported Belize decision on sections 10 to 12, 28 or 47 has been identified. The leading Commonwealth authority on the rights of discretionary objects, Schmidt v. Rosewood Trust Ltd., is a decision of the Privy Council on appeal from the Isle of Man, and is persuasive in Belize (see supra ¶¶ 250.04–250.05). Its reasoning is examined in ¶ 820 and ¶ 850. The American decisions concerning Belize trusts, examined in chapters 1 and 26, bear on the position of beneficiaries who are also settlors or spouses (see supra ¶ 160; infra ch. 26).
Plan of the chapter. Paragraph 810 identifies who may be a beneficiary. Paragraph 820 distinguishes fixed and discretionary interests and explains the nature of a discretionary object's interest. Paragraphs 830 and 840 examine protective and spendthrift trusts and their relation to section 7. Paragraph 850 deals with information and accounts. Paragraph 860 covers disclaimer, release, termination by the beneficiaries and variation by the court. Paragraph 870 sets out the remedies of beneficiaries. Paragraph 880 considers the claims of a beneficiary's creditors, spouse and heirs. Paragraph 890 outlines the United States reporting rules for beneficiaries and collects drafting points.