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General

Challenging estate boundaries

Whether or not a blended family is involved, if provision is not made for a child or if a trust has been settled notwithstanding the degree of relationship, then a remedy with the assistance of the court can be difficult, if not impossible. While the Family Protection Act 1955 can provide an opportunity for children who have not been adequately provided for in a parent’s will, there is no corollary provision in the event assets are transferred to a trust during that parent’s lifetime.

When a child is part of a blended family or when more complex family dynamics are in play, the circumstances can be provide limited avenues for resolution.

These issues are explored in Commons v Commons, which related to a son of an earlier marriage, effectively disinherited through the settlement of assets onto an inter vivos trust.

In Commons v Commons an effort by the plaintiff to create a testamentary interest in an inter vivos trust settled by the will-maker failed to survive a strike out application. A separate cause of action alleging that by paying the entire annual income of the trust to the will-makers’ widow the trustees had failed to properly exercise their powers (the payments placing the income entirely into the estate of the widow and, accordingly, her children) survived the strike out application without seeming convincing.

The outcome in Commons v  Commons may be contrasted with a 2017 strike out decision in Rule v Simpson where, among other issues, the court could not rule out the possibility that the transfer of assets to a trust could breach a fiduciary duty owed to the plaintiff.

References

Commons v  Commons [2018] NZHC 2301

Rule v Simpson [2017] HZHC 2154

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