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Corporate Derivative Shareholder Claims, Beneficiary Trust Claims

With corporations, the directors and officers manage the corporation for the benefit of the shareholders. With trusts, the trustees manage the trust for the benefit of the beneficiaries. When a corporate officer/director commits a wrong against the corporation, or causes another injury to the corporation, a shareholder can bring a derivative on behalf of the company and sue on its behalf. Derivative actions do not, however, exist with trusts.

Generally, a beneficiary may not bring an action at law on behalf of a trust against a third-party. International Fire., Local 2665 v. City of Clayton, 320 F.3d 849, 851 (8th Cir. 2003). Instead, the right to bring such an action belongs to the trustee. Id. If the beneficiary believes, and is able to prove, that the trustee is acting improperly for not pursuing a claim, then an appropriate course of action may be a direct breach of trust claim against the trustee by the beneficiary.

Contact with questions about corporate litigation and trust litigation.