Just before her death in 2023, Maureen McAulay changed her will leaving all assets to her family trust, with trustees then left to decide on distribution of her property on death. Inevitably, her two children then disagreed with trustees’ allocation of their late mother’s assets. Litigation followed.
Daughter Isa, living in New Zealand as a solo mother with one child, claimed her brother Yusuke’s share should be reduced because of financial assistance he had received during their mother’s lifetime. The High Court was told Yusuke lives in Japan, with their grandmother.
Before her death, Maureen signed a ‘memorandum of guidance’ for her trustees asking that a cash gift of $35,000 be made to Isa’s son and the balance of her property be divided between her two children after considering their ‘reasonable needs and requirements.’
What amounts to ‘reasonable needs and requirements’ opened up a war of words between the two siblings over what they had already received and what they needed now.
In cash terms, there is a net sum of about $680,000 available for distribution, with the lion’s share potentially going to Ina after allowance by the trustees for cash payments received by Yusuke from his mother during her lifetime.
The court was told Ina objected to no allowance being made for about $168,000 given to Yusuke after sale of an Auckland Beach Haven property, previously owned by their mother’s family trust.
In the High Court, Justice Powell ruled this was not a payment to Yusuke from the trust.
The court was told Yusuke signed the agreement to buy Beach Haven, but title was taken in name of the family trust and the trust paid the purchase price.
It was sold two years later, on completion of renovations paid for by Yusuke.
The $168,000 capital gain on sale was agreed with his mother as payment to Yusuke for his work on renovating the property, Justice Powell ruled.
Justice Powell used Trusts Act powers to approve the trustees proposed equal distribution of trust assets between the two siblings.
Yusuke agreed to repay loans previously received. The $168,000 Beach Haven capital gain did not have to be repaid.
The $35,000 gift to Ina’s son is to be held in trust until he reaches age eighteen.
re McAulay-Inui Family Trust – High Court (17.03.26)
26.106