As Gina Rinehart now knows, you cannot operate trusts solely out of your own self-interest when others are involved, even if you are the richest person in Australia.
How do you become the richest person in Australia with a net value of over $12 billion? By leading the charge of Hancock Prospecting, one of the world’s largest iron ore mining outfits and maintaining a family trust from your grandfather worth over $3 billion, like Gina Rinehart.
The mother of four children was sued over the trust by two of those children in 2011.
The controversy started when Rinehart changed a vesting option on the trust from 2011 to 2068.
Now, a judge in New South Wales has ruled that Rinehart cannot be trusted to operate the trust reasonably and has appointed a daughter, Bianca Rinehart, to oversee the trust.
The BBC reported on the story in a recent article titled "Australia's Gina Rinehart loses control of family trust to daughter."
What this case shows is that it does not matter how wealthy you are. If you have control of a trust in which other people have an interest, you cannot operate the trust solely out of your own self-interest.
Trusts must be operated in the interests of all beneficiaries.
If you serve as a trustee, it would be a good idea to seek the advice of an estate planning attorney to make certain that you are managing the trust appropriately.
As Gina Rinehart learned, being wealthy does not give you license to mismanage a trust.
Reference: BBC (May 28, 2015) "Australia's Gina Rinehart loses control of family trust to daughter."
