Concerns over a beneficiary’s ability to handle family trust money led to the High Court giving its ‘blessing’ to resettlement of trust funds on a new trust allowing funds to be released in a controlled fashion.
The High Court was told of William and Hilda Blakeborough setting up a family trust for benefit of their children and grandchildren. Son John and daughter Linda are two of the beneficiaries. John is a trustee. The two do not get on.
Evidence was given of Linda accusing her brother of ‘stealing her inheritance.’
Their parents had expressed the wish that an Auckland property in Papatoetoe owned by the Trust but occupied by Linda would eventually be handed on to Linda. They also expressed the wish trustees use ‘common sense’ in ensuring any distribution to Linda be protected from possible matrimonial or financial problems.
Subsequently, trustees questioned Linda’s ability to deal prudently with such a substantial asset. There was evidence of Linda failing to maintain the property and of Linda being sued by a tenant.
In 2021, the Papatoetoe property was sold, leaving a cash balance two years on of some $729,000 dollars after deducting costs of sale and legal fees following the earlier tenancy dispute. The Trust has been paying Linda one thousand dollars per week from the sale proceeds to assist with her accommodation costs.
A conflict arose between beneficiaries. Linda said she was entitled to the remaining balance; other beneficiaries wanted a share.
To avoid further conflict, the trustees put a proposal before the High Court for its blessing. The trust deed does allow trustees to resettle trust assets on a new trust at their own initiative. Getting a judicial tick saying the trustees’ proposed resettlement was okay had the advantage of forcing warring beneficiaries to accept the outcome.
Justice Harvey directed net trust funds be transferred to a new trust naming Linda and her children as beneficiaries. Perpetual Trust Ltd was appointed trustee.
Re W & H Blakeborough Trust – High Court (4.12.23)
24.025