Discretionary beneficiaries of family trusts have no direct entitlement to trust assets; a rule frustrating Garry Renall in dispute with brother Ian over allegations Ian is getting a cheap deal in sale of trust property.
The two brothers, together with sister Jennifer, are discretionary beneficiaries of a family trust set up by their parents in 1996. Major asset is two adjoining properties at Waiuku near Pukekohe, in South Auckland.
The High Court was told trustees recommended winding up the trust following death of their surviving parent in 2022, their mother Dawn.
Ian is a trustee, together with directors of Pukekohe accounting practice: Campbell Tyson.
Trustees invited all three beneficiaries to put in an offer for the two properties.
In May 2025, Ian offered $1.12 million.
Evidence was given of Ian failing to stump up with cash on settlement date.
Garry alleges his brother is not only buying at below market rate but that he has his daughter on site as a tenant paying rent at a concessionary rate.
He also has a general complaint that trustees used trust funds to pay for completion of a boundary adjustment benefitting Ian; a cost Ian should have paid, Garry says.
Garry lodged a caveat over title to the trust properties, blocking completion of the sale.
In the High Court, Associate Judge Gellert ruled Garry had no legal standing to register a caveat.
He has no direct claim over trust assets. At best, he has an indirect entitlement to the proceeds of sale, should the trustees choose to make a distribution to him when cashing up the family trust.
In a May 2025 letter to the three beneficiaries, trustees stated their ‘view’ that cash proceeds from sale would be distributed equally between the three beneficiaries.
This created an expectation that Garry would be treated equally on winding up, Judge Gellert ruled. But it did not give him any caveatable claim over trust assets.
Judge Gellert ruled the caveat is to remain temporarily, lifted when the sale to Ian is completed and subject to a condition that $200,000 from sale proceeds is to be held in trust, pending final resolution of the family dispute.
Renall v. Renall – High Court (13.03.26)
26.102