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Beneficiaries, Beneficiary rights, breach of trust, Removal of trustees, Settlor; settlors, Settlors, Testamentary trusts, trust, Trustee liability, Trustees, Trusts, Will trusts, Wills

War of the roses

War of the Roses is a 1989 American film based on the 1981 novel The War of the Roses by Warren Adler. The film, which  co-stars Michael Douglas, Kathleen Turner and Danny DeVito chronicles the demise of a marriage  against the backdrop of a beautiful home that the couple, literally fight to the death over.  Trust disputes can be like that. I remember a scene where Michael Douglas’ character urinates over a fish dish that Kathleen Turner has prepared to serve at a dinner party.

Again, trust disputes can be like that.

Importantly, the courts, when called in to intervene are not too fussed about who was mean to who first.  Whether an application for the removal and appointment of a trustee is made under s 21 of the Administration Act 1969 or s 51 of the Trustee Act 1956 the enquiry follows the same lines where the question is one of expedience.

Importantly as noted at [22] ” … the Court may substitute trustees in a variety of circumstances even where there has been no misconduct or neglect of duty.  The paramount concern is whether the trust is being properly executed for the benefit of those beneficiaries for whom the trust estate has been created.  These long-established principles recognise that the main guide is the welfare of the beneficiaries.  if the continuation of a trustee is detrimental to the execution of a trust the trustee is expected to stand aside…”.

Expected to stand aside.  Being a trustee can seem an honour, or carrying out an obligation bestowed, whether or not sought.

When beneficiaries and trustees do not get on, much like with a failed marriage, there can be a tendency to chronicle who has failed and how, and how often.

Sadly, for those who like to keep lists of wrongs (you know who you are), this is not what guides the court, which does not first engage in a (see [26]) “meticulous examination of the evidence” but rather takes a principled approach guided as follows:

  1. the starting point is the Court’s duty to oversee the proper administration of trusts and estates
  2. the settlor / will-maker’s wishes are given considerable weight
  3. the welfare of the beneficiaries is the “litmus” test
  4. hostility between trustees and beneficiaries is not, by itself, a reason for removal – but will become relevant if it prejudices the beneficiaries’ interests
  5. circumstances should be viewed by the Court in macroscopic not microscopic fashion

The point that will be returned to is  whether the estate or trust is being properly administered.  Where there are injudicious e-mails or other correspondence evidencing bitterness and enmity the question will need to be asked – can the trustee do the job in these circumstances – where the communications evidence irreconcilable differences the answer may well be no..  The trustee does not need to be shown to have misconducted his or herself in the administration of the trust – the better matter to evidence is the proper management (or not) of the trust.

Being a trustee can be hard work – there is no need to balance from chandeliers to prove aptitude or determination – but there is need to realise that if you think that that is where you should be you have taken a wrong turn.

The focus is not the sky, or the ceiling, but the welfare of the beneficiaries.

References:

  • Vlaar v Van der Lubbe [2016] NZHC 2398

 

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