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Divorce & Family Law This forum is for discussing any of the legal issues involved in your divorce.

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  #1  
Old 05-17-2015, 10:47 AM
Karver Karver is offline
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Default Children are Shareholders, can they sue?

Hi, before my marriage broke up in 2012, my father passed away in 2009 and left a trust fund for my three minor children, in which I alone am the Trustee. That will was probated and the trust runs under a CRA account number.

When my husband and I were still together in 2011 I invested the trust fund into two commercial properties through my ex as he is a commercial realtor. He is the nominee for the two building corporations on behalf of all the shareholders and property manages the buildings and he himself is also a shareholder. I am listed as a shareholder on behalf of three boys names 'XYZ Trust".

The trust has been receiving dividend since 2012. My ex and my divorce has gotten heated again and in December 2014, the dividend payments stopped coming. I continually asked what was going on and finally in April 2014, the ex sent me an invoice arbitrarily deciding that the trust owed him a personal guarantee fee that he had signed on the trust behalf back in 2011. This was never discussed, there was no contract, this is news to me and the ex has been keeping the dividends entirely to pay himself personally. So far he is kept in excess of 14,500.

I am self represented but get sparse advice from a lawyer when I need it. The lawyer recommended to me that the 'XYZ Trust' should start a claim against the corporations and my ex for breaking contract. Can I list more than one defendant on a claim? _____ Building Corp, _____ Building Corp and ex name as Nominee

It was also suggested that I personally sue the ex under our family law action number for breaking the agreement and said the boys could also be listed on the claim as they are shareholders and it's their trust being used as a pawn in this divorse. Although I'm not quite clear as to what I'd be asking for as far as remedies sought in the personal claim? Damages for...?

Opinions on the whole thing? I've got to get something going.
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Old 05-17-2015, 08:29 PM
Berner_Faith Berner_Faith is offline
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I think you need an actual lawyer. I really can't see many posters here having advice for you as I doubt many have gone through this. Your post is also confusing. If he signed back in 2011 how did you not know since you were together? Does he have higher signing authority than you?
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Old 05-17-2015, 10:06 PM
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mcdreamy mcdreamy is offline
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If you are the bare trustee, you govern the trust. You can and could renounce the appointment of your ex as signatory and nominee of the trust.

There is an existing shareholder agreement on the commercial properties? Is the trust a minority or majority shareholder?

In all likelihood, the declaration of dividends is dependent on a majority consensus of shareholders of the investment properties. As sole trustee of your trust shareholder, you can remove his authorization /designation to act on behalf of the Trust and under any nomination agreement.

eta: I should add - for your posted question, if the children are under the age of majority then no, they cannot sue personally, the Trust has to act on their behalf.

Last edited by mcdreamy; 05-17-2015 at 10:10 PM. Reason: eta - minority children can not sue
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Old 05-18-2015, 11:01 AM
Karver Karver is offline
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Hi, my ex has no signing authority on the Trust. But, he is the realtor who put the building purchases together and is the property manager and was nominated by all shareholders (not me in 2011 because we were a couple and he did it all) to handle the affairs of the buildings on behalf of the shareholders. So when the buildings make a profit, he has his accountants make out dividends cheques proportionate to the shares you own in the building. To make the operations run smoothly, all shareholders gave his company signing authority to issue dividends from the corporations, pay the building tax, get repairs, etc.
So he has just used his authority of Nominee and the accounting department to make the Trusts dividends payable to himself and kept the dividends under the guise of a fee.

Back in 2011, when we were together and the buildings were being purchased, a mortgage had to be taken out to complete the sale as the shareholder portion only covered about half the purchase price. I'm not sure of all the details, as Ive never been supplied any info. My ex is now saying after 3 years, that he is entitled to all these fees for the personal guarantees that he signed at the bank on the Trusts behalf. This was never discussed with me then or now until the dividends just stopped coming.
Thank goodness in 2011 I had him register the trust as an actual shareholder, or all that money would be gone.
I have sent the other shareholders registered mail to the effect that my ex no longer speaks on the trusts behalf and anything regarding the trust comes to me, the trustee. Although, it's not helping as my ex has the power of running the buildings, he doesn't care what I say.
I will sue on behalf of the Trust.
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Old 05-18-2015, 11:06 AM
Karver Karver is offline
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There were Joint Venture Agreements signed in 2011 for each property, with the trust being listed as a shareholder. With the purchases being commercial real estate, the prices were substantial. The trust owns 5% shares in one and 11.11% shares in the other. So the trust is definately a minority. My ex also has shares which are not much more. The other shareholders are about double. I guess the banks are the majority.
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Old 05-18-2015, 11:08 AM
Karver Karver is offline
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I had sent an email to ex in June 2014 asking about a lesser dividend payment and asked straight out, "are you taking fees" and he responded "no, no fees."
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