Defeating property claims by estranged family after death through adroit use of deathbed family trusts is being tested in the High Court.
A burgeoning trusts industry is developing seeing assets shuffled into a family trust just prior to death leaving a deceased estate penniless. Estranged family members looking to sue under the Property Relationships Act or the Family Protection Act are greeted with news that this is a waste of time and money; the estate is valueless. Disputed assets are now held separately, protected in a family trust, managed and distributed according to terms of the trust.
In the first step towards challenging a deathbed family trust, members of the Parbhu family had the High Court appoint an independent lawyer to investigate what had happened to their late father’s assets.
The High Court was told Mohan Parbhu died in 2021. Terms of his will appointed his second wife Lilawati Mohan Parbhu as executrix of his estate. Lilawati together with a daughter of Mohan and Lilawati are the sole beneficiaries. Children of his first marriage received no bequests. Learning that Mohan had transferred all his assets to a family trust shortly before his death, these children challenged Lilawati’s appointment as executrix. Assets transferred include three residential properties. They argue these assets should be clawed back into Mohan’s estate, becoming available should their personal statutory claims succeed against their late father’s estate.
Justice Peters removed Lilawati as executrix, appointing an independent lawyer in her place. Lilawati cannot be expected to act in an impartial manner as executrix when her entitlements as a beneficiary are being challenged, Justice Peters ruled.
Evidence was given that Mohan’s sole asset on death was cash totalling some $19,000. The independent lawyer was empowered to make a full investigation.
Parbhu v. Parbhu – High Court (25.11.22)
23.006