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Beneficiaries, Deed of Trust, Memoranda of Wishes

Be careful what you wish for

Memoranda of wishes, also referred to as statements or letters of wishes, letters or memoranda of guidance and similar are a common feature of modern trusts. However, perhaps surprisingly there has been little guidance regarding the position of subsequent memoranda of wishes, specifically where subsequent wishes are inconsistent with earlier wishes do the most recent wishes over-ride earlier wishes. This was considered in Public Trust v Kain (see Mandatory or permissible and what about subsequent?) where the following directions were given:

That decision was appealed.

In Kain v Public Trust, with one exception, the Court of Appeal up-held all aspects of the High Court decision with respect to subsequent memoranda of wishes. With respect to the direction at [134(a)] (set out above), that direction was set aside and replaced with the following, more detailed direction:

The reason for the amended direction is to address the question as to whether Public Trust was required to tale the settlor’s wishes into account, thus making the consideration mandatory. As stated at [121]:

This is in line with the Court of Appeal decision in Chambers v SR Hamilton where the Court of Appeal said that “it is necessary for trustees to read and understand the statement of wishes to discern the settlor’s views, having done so, the trustees must then make an independent assessment of the appropriate course of action.  That is, whatever the settlor’s wishes, the trustees must consciously apply their independent discretion in exercising their powers and discharging their obligations as trustees.  This Court confirmed that trustees could take the wishes into account (in other words, they were entitled to) but were not required to do so.”

References:

  • Public Trust v Kain [2021] NZHC 1000
  • Kain v Public Trust [2021] NZCA 685
  • Chambers v S R Hamilton Corporate Trustee Limited [2017] NZCA 131

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