Recent Trusts Act rules were used to wind up two Taranaki family trusts without the need to get prior approval from adult beneficiaries; a law change avoiding prolonged negotiations with trust beneficiaries.
Allocation of trust benefits had become a bone of contention between two sisters Gail Fisher and Carol Mobbs, following deaths of their parents.
The High Court was told two family trusts set up by their parents Toss and Betty Robertson provided financial assistance for daughter Gail and her spouse to purchase a farm near Hawera.
More than a decade after their parents’ deaths, the two daughters discussed with the trusts’ trustees as to how each Trust could be wound up and assets distributed. No agreement was reached. Carol claimed her sister’s family had received considerable benefits from the two trusts whilst her family had not.
A mediated settlement was reached in the face of threatened High Court litigation. The effect of this settlement is to see Carol receive a cash payment of $730,000 with sister Gail to take the balance of Trusts’ assets.
The legal complication was that Carol and Gail are not the only trust beneficiaries; their children and grandchildren are also named beneficiaries. Trust law imposes checks and balances to stop their rights as beneficiaries being improperly negotiated away.
Long-standing Trusts Act rules allow the High Court to give approval on behalf of those beneficiaries not of full legal age. Adult beneficiaries have been in a different position. They could give, or withhold, permission on their own account. This has led to messy stand-offs in some family trust disputes.
New Trusts Act rules allow the High Court to dispense with approval from adult beneficiaries, approving family trust changes on their behalf.
Justice Grau gave approval to the agreed Trusts’ windings up on behalf of Carol’s and Gail’s seven adult descendants. It was only ever intended they would be primary beneficiaries should either Carol or Gail die before the Trusts were wound up, she said. Justice Grau commented these adult beneficiaries will still share in trust assets through those assets being transferred to their mothers, and for one adult beneficiary to a grandmother.
re Mountain View Trust & Hill View Trust – High Court (15.10.24)
25.015