Beneficiarly Liability in Trusts

[LanceUk]

Hi,

I am looking at purchasing a share of and expensive vehicle (not a luxury vehicle) that I can use when needed - sometimes for personal use but more often than not - for business use. As it will be used maximum twice/month for no more than an overnight trip, I can't justify spending c. £150K on an outright purchase.

I have found an example that ticks the boxes and the syndicate seem to be professional, with requisite written agreement/rules of operation, etc. The price is about where I expect it to be, so it is not a dodgy bargain.

Although I think the level of insurance is commensurate with the max payouts should one of the syndicate members have an accident that causes damages (or worse) to others, the syndicate vehicle is a trust rather than a limited company. So, in the unlikely event of a syndicate member causing an accident that gives rise to a huge claim above the insurance threshold, are all the syndicate members (beneficiaries) joint and severally liable from their personal assets outside the trust to the claim, or does the liability stop with the assets of the trust?

Thanks in advance...
Lance

 

[ethical PR]

What does it say in the contract ? @LanceUk

 

[LanceUk]

The trust doc has a general indemnity for other beneficiaries and the trustee if the vehicle is operated outside the constraints imposed by insurance is as about as close as I can find in terms of liability. This may be encorceable to the personal assets of whoever was at fault, but if their assets don't cover it, can the claimant come to the other beneficiaries?

Also, the question is, are the personal assets of beneficiaries outside of the trust able to be called upon for liabilities of the trust?

Thanks...

 

[Mark T Jones]

As @ethical has said, this sort of detail will all lie in the contract.

I do know that light aircarft are often owned this way, so a suitable forum might be able to guide you

 

[eteb3]

Can't disagree with the other two posters: needs a lawyer to look at the detail. But just on the face of it, wouldn't a claim for damages arise against the operator of the vehicle, rather than the owner?

For general info, the basic position is that trustees are liable for claims against them as legal owners of trust property. They are normally entitled to be indemnified out of the trust property for those claims. If the claim exhausts the trust property, then they're out of pocket.

In trust terms, the beneficiaries wouldn't be exposed - but there may be an indemnity in an allied contract (remember a trust is not a contract).

The indemnity you cite would seem to be an indemnity to other co-owners by a misbehaving co-owner who damages the property uninsured. If the personal assets of the wrong 'un don't cover it, then the majority can't recoup their loss. I can't see that that indemnity would be engaged by claims from third parties.

 

[LanceUk]

Many thanks for your responses...

Lance