High Court ‘blessing’ in advance of trust restructuring absolves trustees from any personal liability, a process used by trustees of an un-named multi-million dollar discretionary family trust where tax consequences following restructuring are still unknown.
Given the alias ‘Generations Family Trust’ in a publicly released court judgment, the Wellington-based Trust was described as holding shares valued in the ‘tens of millions’ of dollars, together with five million dollars in bank term PIE deposits.
The Trust was established in 1984 by a couple who had no children together, but between them had nine children from previous relationships.
The two died a few years apart, more than twenty years ago.
Trustees have subsequently made annual payments to beneficiaries.
The High Court was told there are currently fifty trust beneficiaries: encompassing the settlors’ nine children, plus grand-children and great-grandchildren. These beneficiaries live all round the world; primarily in New Zealand and Australia.
Following general agreement that it was time to windup the Trust, trustees liaised with lawyers, accountants, actuaries and tax specialists, settling on a formula to divide trust capital into nine tranches.
Trustees propose cashing up trust assets; proceeds settled on new multiple trusts.
Their proposal put to beneficiaries raised no objections, other than concerns about potential tax liability. With beneficiaries spread across multiple tax jurisdictions and with each jurisdiction having its own tax rules, some beneficiaries would see their windfall payout cut back because of tax due.
When applying to the High Court for Trusts Act ‘blessing’ to their proposal, trustees said they intend to hold back some assets from sale.
Payment in kind rather than cash might be more tax advantageous for some beneficiaries.
For others, the Trust might pay their tax bill out of trust assets.
Despite the lack of finality as to how assets might be distributed, Justice Boldt gave his blessing.
The proposal is balanced and properly reflects the interests of beneficiaries, he said.
The consultation process has been robust and detailed, he added.
re ‘Generations Family Trust’ – High Court (15.04.26)
26.138