27 September 2024

Estate: Estate William Frame v. Frame and W&G Trustee

 

While brother Allan was left with ownership of the Roxburgh central Otago family farm on death of his father, it required court action to pay estate bequests owed his four sisters.  Associate Judge Paulsen ruled Allan Frame had no grounds to delay payment of $1.1 million due his siblings.

After their parents’ deaths, Allan was left in control of the Burnbank Trust which owns the family farm on Langlea Road.

The High Court was told of a 2006 family arrangement which saw the family farm transferred to the Burnbank Trust for $2.1 million.  The farm was previously owned in partnership by Allan and his father William Frame.

As is common in these family transactions, no cash changed hands.  The Trust owed Allan $720,000; his father William $1.4 million.

At time of his death in 2023, William was owed $1.1 million by Burnbank Trust: an $800,000 balance still owing on sale of his share of the farm to the Trust; plus a credit balance of $371,000 owed by the Trust, part of ongoing financial transactions between the Trust and the Frame father and son farming business now leasing the property.

Terms of William’s will has the effect of bequeathing this $1.1 million to Allan’s four sisters with payment to be made six months after his death.

Executors of William’s estate recognised Allan might face commercial difficulties quickly raising $1.1 million to pay his sisters.  They were open to discussions on his plans to raise finance, or to sell part of the farm to get cash.

The court was told Allan instead stalled.

He wanted to wait until financial statements for farming operations were prepared at end of the financial year to establish how much the farming partnership might owe the Burnbank Trust.  This could reduce the amount of the $1.1 million debt, he claimed.

Judge Paulsen ruled against any delay.

The $1.1 million was due to William’s estate now.  No future set off could operate.

On William’s death, the Trust’s obligation to pay William’s estate was fixed at $1.1 million due.  William personally was no longer farming once dead.  For accounting purposes, the business relationship with the Trust immediately after his death is between the Trust and a continuing farming business including William’s estate as partner, not William personally.

The effect of this High Court ruling is that William’s executors can force sale of the family farm if Allan does not take immediate steps to find $1.1 million for payment to his sisters.

The court was told Allan has plans to subdivide and sell part of the farm.

Estate William Frame v. Allan Frame & W&G Trustee Ltd – High Court (27.09.24)

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