16.6 HOW DOES THE ELEMENT OF CONTROL WORK
I will try to explain how the element of control can make a trustee and other persons not a beneficiary the beneficial owner in the trust.
According to the Trust Property Control Act (TPCA), a beneficial owner of a trust is a natural person who directly or indirectly ultimately owns or controls the trust property. The TPCA also defines control as the ability to exercise effective control of the administration of the trust. Therefore, the element of control can make a trustee and other persons not a beneficiary the beneficial owner in the trust if they have the power or influence to determine how the trust property is managed, distributed, or used.
For example, a trustee may be considered a beneficial owner in the trust if they have full discretion over the assets and beneficiaries of the trust, or if they have voting rights, veto rights, or other decision-making authority over the trust affairs. Similarly, a settlor, protector, enforcer, or manager of a trust may be considered a beneficial owner in the trust if they have the power to appoint or remove trustees, beneficiaries, or assets of the trust, or if they have similar powers over a legal arrangement.
The element of control can also make a trustee and other persons not a beneficiary the beneficial owner in the trust if they act on behalf of another natural person who ultimately owns or controls the trust property. For example, a nominee or intermediary may hold shares or rights in a trust on behalf of another natural person who is the actual beneficial owner. In this case, the nominee or intermediary would also be considered a beneficial owner in the trust and would have to disclose their principal or beneficiary.
The purpose of identifying the beneficial owners in a trust is to prevent the misuse of legal arrangements for money laundering or terrorist financing and to ensure that there is adequate, accurate and up-to-date information on the beneficial ownership and control of trusts that can be obtained or accessed in a timely manner by competent authorities. The TPCA requires trustees to establish and record the beneficial ownership of trusts, keep a record of the prescribed information relating to the beneficial owners of trusts, lodge a register of the prescribed information on the beneficial owners of trusts with the Master’s Office, and ensure that the prescribed information is kept up to date.
I hope this helps you understand how the element of control can make a trustee and other person not a beneficiary the beneficial owner in the trust.
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