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Acknowledgement of Debt, Beddoe Order, Beneficiaries, Directions, Trustees, Trusts, Trusts Act 2019

Bless me for I have been acrimonious

The background to Turvey v Vance relates to diametrically opposed intra-family division with respect to the FB Turvey Family Trust and the P Turvey Family Trust (the Trusts). The Trusts were mirror trusts and as such the settlor of each of the trusts was not able to benefit from the trust that person settled. In earlier proceedings the trustees of each trust were removed and replaced with a court appointed trustee, Mr Vance.

The court appointed trustee sought the blessing of the court pursuant to section 133 of the Trusts Act 2019 with respect to that trustee’s proposed course of action. The court helpfully sets out the types of applications that can be subject to an application for directions at [23]:

It is common ground that the “blessing” application falls into category 2 (at (b) above)). As noted at [24] The judgment in Public Trustee v Cooper provided a three-step framework for determining “category 2” applications (commonly referred to as “blessing” or “sanction” applications) as follows:
As set out at [25]:
A significant background fact was that although the settlor of each of the Trusts could benefit from the other trust, both of the Trusts excluded any member of the class of Discretionary Beneficiaries who was a notional settlor. Both of the settlors made gifts to the trust of which they were not a settlor, and as such they became notional settlors. The surviving settlor gave evidence that this was not intended by her or her late husband and rectification was ordered to correct this.

The trustee wished to distribute all of the funds of the trust from which Patricia could benefit and for the funds of the other trust to be divided between the children of Patricia and her late husband. This decision would result in many named beneficiaries receiving no distribution. Notwithstanding that there was no memorandum of wishes, the court was satisfied that the trustees view that this would be consistent with the original spirit and intent of Frank and Patricia in settling the mirror trusts, and in light of the trustee’s broad discretion, this was a decision that the court could bless.

A range of adjustments were proposed by the trustee. These were largely accepted by the court. Accordingly, the application pursuant to section 126 of the Trusts Act was effectively addressed by the court’s approach to the blessing application.

References:

  • Turvey v Vance [2022] NZHC 1167
  • Turvey v Turvey [2020] NZHC 2403
  • Trusts Act 2019, s 126, s 133
  • Public Trustee v Cooper [2001] WTLR 901 (Ch D) at 922–924

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