Family Trust: Ash v. Singh

The High Court blocked attempts by Auckland lawyer Darsan Singh to benefit personally from her late husband’s million dollar family trust and to potentially remove as beneficiaries children from his first marriage.

Shean Singh died tragically in a boating accident in May 2015.  He left his second wife Darsan and their two children, plus two children from his first marriage.  Before marrying Darsan, Shean set up the Shean Singh Family Trust.  His children, born and yet to be born, were named as beneficiaries.  The Trust made no provision for any wife or de facto partner.  Shean himself was not a trustee. In 1996, the Trust was varied to add Darsan as a beneficiary with terms resulting in her potentially taking 60 per cent of trust assets and Shean’s four children receiving ten per cent each.  After Shean’s death, Darsan was appointed as trustee.

The High Court was told Gabriel, a son from Shean’s first marriage and now living in Germany, had fallen out with the trustees who include his stepmother Darsan and Shean’s brother.  He complains they will not provide details of his late father’s trust and alleges they are scheming to cut him out.  Associate judge Bell said varying the Trust in 1996 by including a power to remove individual beneficiaries was clearly a device aimed at Gabriel.  There is no evidence Shean ever wanted to exclude his children as beneficiaries, he said.  Evidence was given that the Trust’s current net worth is about one million dollars.  It owns properties in the Auckland suburbs of Mt Eden and Redvale.

Judge Bell ruled the 1966 Trust variation was of no legal effect.  The original Trust deed has no power to add beneficiaries.  Trustees do have power to resettle trust assets.  This is a power to take assets out of the trust and create a new trust.  This does not allow a new trust to be set up for someone who was not a beneficiary of the original trust, Judge Bell said.  Application to rectify the Trust by adding trustee powers to name extra beneficiaries was refused.  Rectification enables a document to be corrected, to match what was originally intended.  Shean Singh was himself a lawyer.  It is improbable that the Trust deed as originally signed is not what he intended, Judge Ball said.  He is now dead and cannot give evidence of his original intent.  Darsan Singh was removed as a beneficiary of the Sean Singh Family Trust.  The power to potentially remove Gabriel as a beneficiary was void.
[Post-judgement note: the Court of Appeal ordered a High Court hearing to determine whether in fact Shean Singh had intended to include in his family trust a power to add further beneficiaries.]   

Ash v. Singh – High Court (24.11.17)

18.011