A judge should not be able to over rule how a trust is run

The whole point of setting up a trust is not only for protection of assets but also to create a living will.  A trust, properly set up, can provide its beneficiaries with income long after the person who set it up has died.

The old-fashioned traditional way was to write a will.  Traditionally, a will leaves the assets to family members and specifies how the assets should be divided.  Wills are regularly contested in court, particularly if a parent does not divide the assets equally amongst the remaining children.

Even when the division of assets is equal, one sibling can still demand more than their “fair share”.  I know this for a fact as it happened to a friend of mine.  The unreasonable and selfish sibling in my friend’s case ended up getting the majority of the assets simply because they  made it clear that they were prepared to spend years in court and cost the other siblings thousands of dollars, even if this meant that all the inheritance was used up.

Until I read this article I believed that setting up a trust was the best way to provide for my children after my death.  The purpose of a trust, I believed,  could not be overruled  in court. If the trust stated clearly that the assets are not to be sold, but that the passive income was to be divided equally amongst the trust beneficiaries, I expected that it could not be contested.  This latest case in the article below shows that a judge can overrule totally the wishes of the person who set up the trust.  This is a terrible precedent.  It makes me think that no matter how I structure my will or set up a trust any disgruntled relative can use the courts to override it.

An acrimonious sibling dispute over a million dollar waterfront property has led to a High Court judgement overturning their late father’s will.

It’s becoming increasingly common for courts to overturn wills, says one top lawyer.

Maureen Parsons, 68, and Stephen White, 64, won a High Court battle against their sister Jocelyn Chambers, 66, over a beachfront Mt Manganui home that had been left to them by their late father, Royce White.

The three children were beneficiaries of their parent’s trust which owned the $1.7m property in Grace Ave, a block away from the Mount.

When Royce White, a retired Te Kuiti farmer, died in 2012, he wanted his children to continue to own the land, which had been in the family since the 1920s.

But that ‘laudable intention’ led to four years of court battles, and the withering away of their inheritance through costly legal bills.

According to the judgment, the two lawyers who administered the trust had the property valued at $945,000 in 2013, and offered the property to Jocelyn Chambers.

Why was the property offered to one of the beneficiaries?  The trust stated clearly that the asset (the property) was not to be sold.  The lawyers were acting against the clearly stated purpose of the trust.  Isn’t that malpractice?  Were the lawyers the trustees?

But White and Parsons didn’t want the sale to go ahead, believing the valuation was too low, and wanted the property sold on the open market and the proceeds split evenly. It was valued again in March 2016 at $1.725m.

Court proceedings were launched in 2014 by White and Parsons to remove the trustees and the case was heard over four days trial at the High Court at Hamilton in April.

Justice Heath said the house should not be sold to Chambers, and instead, should be sold to one of the siblings at the 2016 valuation, or sold on the open market.

The judge said the litigation had “exacerbated an already strained relationship”.

Outside court, Jocelyn, who owns a Te Kuiti farm with her husband Gerald, said she had taken care of her father towards the end of his life.

“The sibling wanted to overturn my father’s wishes. There began a battle for four years basically. They’ve been rewarded for it. I was dragged into it. I got completely and utterly over-ridden. It’s a pretty sore point for me.”

But White, an Auckland real estate agent, said the judgement “fully supported our stance”.

He issued a joint statement with Maureen Parsons, saying: “Our families have endured both financial and emotional stress over the past 4 years which could and should have been avoided.”

Their father’s main request was that everyone was to be treated equally, he said.

The father’s actual main request was that the land, the asset, the property, not be sold. He  stated clearly that he wanted it to remain in the family.  The rental income from the property should have been divided equally among the beneficiaries.  The key problem with the situation seems to be that the property was being rented at $50 a week!

He said the litigation had cost the family in excess of $300,000.

White said when he tried to enter the property to inspect his late father’s chattels, he set off an alarm and the police were called. He said the property was rented out at $50 to their father’s caregiver for four years against his wishes.

Auckland lawyer Bruce Dell, whose firm has handled in excess of 25,000 wills, said it was “lunacy” that judges were effectively rewriting people’s wills.

He compared it to another case involving Deborah Chambers court dispute over her late husband Sir Robert Chambers’ will with one of his sons.

“You’ve got highly intelligent people with mixed families, children on each side, they make a will and one of the kids comes along and wants to change it. It’s just lunacy.”

– Sunday Star Times


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