Examining trustees

An order for examination can be sought after judgment has been obtained agains a debtor to determine the debtor’s means.  Where an order is made the debtor is brought before the Court  and examined about his or her financial situation.

However, it is not always appreciated that if the judgment relates in whole or in part to a debt occured as a trustee, the examination can extend to examination of the debtor in the debtor’s capacity as a trustee and examination of documents the debtor controls as a trustee.

While trusts can provide protection against creditors, it is important to appreciate the time-frames within which dispositions to trusts can be clawed back and the fact that any ungifted advances will remain an asset in the donee’s hands.

References

• King & Ors v Woods [2014] NZHC 1356
• High Court Rules, r 17.12