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Memoranda of Wishes, Trustee Act, Variation

Well intentioned

Miller v Cregten touches on the vexed issue as to settlor’s wishes to ensure that only identified beneficiaries benefit and that:

“if a beneficiary is married, in order to protect the beneficiary from the
possibility of a matrimonial property claim in the event of a breakdown
of his or her marriage, you should take into consideration the stability
of the marriage and the purpose to which a distribution would be
applied in deciding whether to make the distribution” to a trust, by way
of a loan, or outright to the beneficiary.”

However, the beneficiaries were not wanting the level of intrusion in their relationships that this entailed. Palmer J approached the matter pragmatically, (in the context of an application pursuant to s 64A of the Trustee Act 1956) setting out some useful guidance regarding how trustees might interpret memoranda of wishes at [22] as follows:

“As I raised with counsel, on the basis of the evidence before me I do have some concern about whether the current trustees have held rather too rigidly to their understanding of Tam’s wishes regarding the trust. I have no reason to think they acted other than in good faith. But Tam’s memoranda of wishes are, explicitly, not binding on the trustees. They are legally required to exercise their discretion in the interests of the beneficiaries of the trust according to the trust deed. And the memoranda do not state that the trust funds are not to be distributed to the primary beneficiaries. The clause regarding protection of beneficiaries from matrimonial property claims requires only that trustees “consider the stability of the marriage and the purpose to which a distribution would be applied” in making a distribution which, it is explicitly envisaged, could be outright to a beneficiary.”

References:

  • Miller v Cregten [2020] NZHC 1262
  • Trustee Act 1956, s 64A

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