High Court approval was needed to amend terms of two Taranaki family trusts to avoid a potential $320,000 tax liability and to protect assets from relationship property claims.
Ian and Debbie Jury transferred business assets into two family trusts in 1992. Acting on accounting advice, the trusts were given termination dates of March 2022. Tax law has changed in the intervening thirty years; each of the trusts incur a $160,000 tax liability if wound up this March.
Following a last minute Trusts Act court application, the High Court agreed to extend the trusts’ lives to 2072, being eighty years from date the trusts were created. Court approved changes are possible where circumstances have arisen which could not have been foreseen when a trust was established.
Beneficiaries in the Jury family trusts include children not of full legal age and children yet born. This category of beneficiaries cannot give their consent to changes. The High Court gave approval on their behalf. Extended family will benefit from management of the trusts’ potential tax liability, Justice Cull said.
The trusts were also amended to remove as beneficiaries the spouses and partners of Jury family beneficiaries. Justice Cull commented it is now the norm with inter-generational family trusts to not include spouses and partners as possible beneficiaries, ensuring assets are protected for lineal descendants and not vulnerable to relationship property claims.
The High Court was told the Jurys have two adult married daughters. The husband of one gave written consent to his removal as a beneficiary. The other had not given consent; he is separated but the marriage is not yet dissolved. Justice Cull waived the requirement to get his consent. He is a discretionary beneficiary only. He would only qualify for a discretionary payout if his estranged spouse died before March 2022.
re I.K. and D.L. Jury Family Trusts – High Court (24.03.22)
22.067