Relationships and trusts can be poor bedfellows. While it can be prudent to protect trust assets from a new relationship partner; the extent of protection provided will be significantly diminished where:
- the new partner meets trust expense’s
- the settlor / trustee runs personal and trust expenses through the trust account
- the history of trustee resolutions is limited to those prepared by the trust’s lawyer when conveyancing or gifting is carried out
Johnstone v Easterbrook is another case in the growing number of such cases where a subsequent partner or spouse is able to successfully claim recognition of her direct contributions to the trust.
This is not the stuff of rocket science and it is difficult not to ask why this matter was litigated given the clear evidence of Ms Johnstone’s direct contributions to the trust that clearly remained owing to her. Perhaps it was assumed that she would just walk away.
She didn’t and was awarded $275,000 plus costs.
Trusts can work to protect assets from new partners – but not where the new partner is making direct (and acknowledged) contributions to the assets; and that is before any consideration of the indirect contributions …
- Johnstone v Easterbrook  NZHC