Alex (A) and his brother Richard (R) have been home-builders for forty years. One day their solicitor suggests that they set up a family trust to "make their lives better." They agree. The trust instrument provides that A and R are to hold the trust property ($10 million) "on trust" for "...such members of the family of the trustees (excluding the trustees themselves), employees and former employees of the trustees, and anyone who has contributed to the business success of the trustees' business activities as the trustees shall select." The trusts are also given an absolute discretion to pay income to "any resident of Fitzroy, except the trustees." Another clause in the instrument provides that the trustees may invest in "any security whatsoever." A is very upset with his son, Edmund (E), because he has married a girl who supports "the wrong football team." As a result, A has told E that he will never receive any trust money. Since 2013, all money from the trust has in fact been paid to R's daughter, Elizabeth. A and R also took $2 million from the trust fund to build apartments for ACU law students. They made $250,000 from this deal. They also invested money in a company named "Froogle" which has lost money and the shares are now worthless. The remainder of the trust money is held in a term deposit at Eastpac Bank. E wants to know if the trust is valid and whether he can "get any money". He is also unhappy about the investment decisions. Advise E.

Answer rating: 100% (QA)

The validity of the trust and Es ability to receive money from it depend on various factors including the terms of the trust instrument applicable tru... View the full answer