Medical practitioner Douglas Sherwin died in 2006 leaving his financial affairs in what was politely described as ‘a shambles’. It took seventeen years to finalise his estate with son Wayne as disappointed estate beneficiary then in court disputing division of their late father’s $1.8 million family trust between himself and his four siblings.
Family trust trustees want to divide the $1.8 million trust capital equally. Wayne says he is entitled to a greater share because their late father’s estate, from which he was entitled to a half share, fell well short of expectations.
The High Court was told Dr Sherwin’s will on death stated one half of his estate was to be held in trust for son Wayne, the balance divided equally between Dr Sherwin’s four other children. It was acknowledged extra provision was needed for Wayne, given his mental health issues.
Distribution of estate assets was delayed by litigation. It was discovered Dr Sherwin’s family trust owed the estate some one million dollars and his second wife Marino claimed ownership of property and an insurance policy. The estate was ruled liable for legal fees totalling $580,000 incurred by parties to the dispute. This resulted in Wayne’s half share to a final payout reducing to about $150,000.
Meanwhile, Dr Sherwin’s family trust sat in the background with a defined termination date of 2026. Terms of the trust give trustees a wide discretion as to how trust assets are to be divided amongst Dr Sherwin’s children. With some $1.8 million likely to be available for distribution, trustees gave notice of their intention to divide the assets equally, with adjustments for loans already advanced to each of them. Advances ranging between $111,000 and $36,000 had already been made in anticipation of the siblings’ later windfall when the trust was terminated.
To avoid continuing litigation, the High Court was asked for a Trusts Act review of the proposed equal distribution.
Wayne said equal division was not appropriate, given that the extra benefit their father intended by bequeathing him half share of his estate had, in practice, not been fulfilled.
Family trust trustees said it was reasonable for them to administer the trust separate from concerns about the will’s impact. It was normal practice in family trusts for trust assets to be divided equally between beneficiaries in those cases where trustees are given wide discretion as to how assets are to be divided, they said.
The court was told Dr Sherwin left no ‘memorandum of wishes’ providing a guide to his trustees as to how they should divide trust assets.
Justice Becroft ruled the trustees proposed equal distribution of trust assets was reasonable.
re Douglas Hilton Family Trust – High Court (24.04.24)
24.101