Parents’ intentions in setting up a family trust had to be taken into
account, the High Court ruled when ordering trustees of a south Auckland
farming trust reconsider their ‘equal shares’ option designed to deal with a
fractious dispute between surviving children.
The Clement
Family Trust owns farming property on Auckland City’s southern boundary at
Hunua. Walter and Nola Clement set up the
trust in 1999 to cater for their three children: Brian, Keith and Derene. Their intent was to ‘balance the ledger’
between their children. The farm had
been in family hands for nearly thirty years.
Various benefits had been gifted to the children by their parents: land,
cash and support by way of guarantees for their borrowings. The status of family trust assets only became
an issue on Nola’s 2013 death as a widow.
The trust then lacked its full complement of trustees. By now the three children were in their 60s
and 70s. They could not agree on
division of trust assets. Sons Brian and
Keith were barely talking to each other as long running disagreements roiled over
payment of rates and use of shared farm assets.
When son Keith took steps to have himself appointed trustee, legal
issues came to a head. As a compromise,
all three children agreed to the appointment of two new independent trustees. Their attempts to find common ground between
the children on a division of trust assets came to nothing. The trustees decided all trust land would be
sold, with the children able to bid, and the proceeds to be divided equally. This decision was challenged in the High
Court. The trustees said they had
received legal advice that they were not allowed to take into account gifts
made previously to individual children.
This advice was wrong, Justice van Bohemen ruled. They were told to reconsider their selling
plans in the light of documents left by Walter and Nola indicating each of the
family overall should get a fair share.
re: Clement Family Trust – High Court (21.12.17)
18.026