Beneficiary rights

Beneficiary Rights

It is generally accepted that New Zealand has more formally settled discretionary trusts per head of capita than anywhere else in the world.  These trusts control assets worth billions of dollars.  However, the majority of people who can benefit from these trusts either do not know about the trust, or about their rights in respect of the trusts.

The purpose of this commentary is to provide a simply written and easy to understand explanation of what it is to be a beneficiary of a discretionary trust and what rights a beneficiary has in respect of a discretionary trust.

To understand what it is to be a beneficiary, it is necessary to have an understanding of what a trust is.

What is a trust?

There is no legal or singularly accepted definition of what a trust is.

However, it is widely accepted that in its simplest form a trust is property that is owned by a trustee for the benefit of a beneficiary or beneficiaries.

The trustee is the legal owner of the property subject to the trust.  However, the trustee cannot benefit from the property (unless the trustee is also a beneficiary).

Most importantly, as well as owning the property, the trustee also owes certain obligations to the beneficiaries. The existence of these obligations are fundamental to a valid trust.  It is from these obligations that the beneficiaries derive their rights.

While the trust’s assets are held for the sole benefit of the beneficiaries; which beneficiaries can benefit, and to what extent is determined at the trustee’s sole discretion.

Although the trustee is the owner of the trust property at law, the trustee can only act for the benefit of the beneficiaries.

Even though the trustee cannot benefit from the trust the trustee is accountable to the beneficiaries for any loss.

If you find this a bit heavy ready, don’t worry.  You are not alone.  Even the experts can’t agree as to exactly what a trust is!

The message you need to take from this chapter is that trusts, unlike companies, are not legal entities.  It is for this reason any dealings with a trust are with the trustees not the beneficiaries.

It is also important to appreciate that the information provided here is in the context of a discretionary beneficiary who has no fixed rights, other than a right to be considered.  Where a trust is a will trust, or a “fixed trust” that provides for beneficiaries to have pre-determined interests in property, for example income for life on $500,000 or my house at 2 Glebe Street; the beneficiary’s rights are related to that property interest and as such are stronger and easier to establish and enforce.

The same is the case where a beneficiary is the final beneficiary of a discretionary trust where a named beneficiary might be entitled to share equally in the trust’s remaining property at the end of the trust.

The subject matter being considered here is that of a discretionary beneficiary with nothing more than a right to be considered, which is also referred to as an expectancy.

 Major trust concepts

A reference to a trust is a generic reference to both property owned by the trust and the complex relationships that comprise a trust.

There is no register of discretionary family trusts.  A trust is only required to register with Inland Revenue if the trustee earns income.   That means that a trust that only owns a family home does not need to register with Inland Revenue.

The settlor is the person who settles the trust.  This person chooses the initial trustee or trustees, decided who will benefit from the trust and what the trust rules will be.  These rules are recorded in a document called the deed of trust.

The Settlor can also elect a person, who can be the settlor or someone else, who can add and remove trustees and or beneficiaries.

The trustee is the legal owner of the trust property and the legal “face” of the property.  Registers of property ownership such as the companies office, which records share ownership, and Land Information New Zealand, which records property ownership, are not permitted to show that the owner of property is a trustee.  This means that trust ownership is private information.

A beneficiary is a person who can benefit from a trust either through receiving capital or income.  If this person is a discretionary beneficiary the beneficiary can only benefit at the trustee’s discretion.

A final beneficiary is a person who benefits when a trust comes to an end.  Trusts can only run for 80 years.  For a trust to be valid it is essential that the final beneficiaries can be identified.

Who is responsible for letting you know you are a beneficiary?

Despite the fact that trustee holds the trust’s assets for the beneficiaries, the trustee of a discretionary trust has no obligation to tell you if you are a beneficiary of the trust.

This may seem somewhat absurd given that the trustee is accountable to you for how the trust is managed.

It is a matter that has been grappled with by the Courts and academics for some time and although the possibility of legislated rules requiring a trustee to notify you that you are a beneficiary is being considered, at present there is no obligation for anyone to do so.

Where a trust is a fixed trust so that each beneficiary has defined interests the matter is a little different and the Courts have held that such a beneficiary must be advised of the trust and the beneficiary’s interests once the beneficiary is an adult.

How to find out if you are a beneficiary

There are no public registries of trusts or trust beneficiaries in New Zealand.

If you suspect that you are the beneficiary of a trust, you can ask the trustee to confirm this.  The trustee would be obliged to answer correctly.  That is, although the trustee need not tell you that you are a beneficiary, the trustee must acknowledge that you are if questioned.

A trustee who did not confirm that a person was a beneficiary when asked would be in breach of trust and could be liable to the beneficiary for any loss the beneficiary incurred because of the breach.

Of course, if you do not know to ask if you are a beneficiary, or who to ask even if you know you might be, you are none the wiser.

If you would like guidance on how to establish whether this might be the case and if so who the trustee is your family lawyer may be able to assist you to make appropriate enquiries.

What can a beneficiary ask a trustee?

Having confirmed the existence of a trust, a beneficiary is entitled to ask to benefit from the trust’s assets.

Whether or not the trustee elects to given anything to a beneficiary is at the trustee’s discretion.  However, if a trustee simply declines a request out of hand, without giving it due thought, the beneficiary can actually apply to the Court to remove the trustee and appoint another trustee.

Regardless of whether requested to do so by a beneficiary, a trustee has an obligation to consider the interests of all of the beneificiaries.  This does not equate to an obligation to given money to or otherwise benefit each beneficiary.

To summarise, a beneficiary has the right:

  • to seek assistance from the Court
  • to be considered as a recipient of trust assets
  • for the trustee to act objectively, fairly and reasonably
  • to apply to the court to have a trustee removed

The right to seek assistance from the Court does not mean that assistance will be given as every case will be considered on its own merits.   As a general proposition the narrower the class of beneficiaries (as is the case with most modern family trusts) the more likely the Court will be to assist

A beneficiary also has a right to trust information.  This is important as establishing that you are a beneficiary is of limited use if you don’t know what the trust’s assets and liabilities might be.  Where trustees will not provide information or agreement cannot be reached regarding what information must be provided or how either party can seek the assistance of the court.  See Erceg v Erceg

Beneficiaries’ right to trust information

A beneficiary is entitled to ask a trustee for information about a trust including:

  • the deed of trust and any deeds of variation (the trust deed is the document that sets out the terms for  the trust, a deed of variation is a document describing changes to the deed of trust)
  • the trust’s accounts
  • contact details for the trustee and any former trustees
  • any documents relating to the appointment or removal of trustees
  • details of all distributions of capital and income and who the distributions were made to (distribution is another term for payment)
  • full details of the trust’s assets and liabilities

If the trust the beneficiary is enquiring about has already come to an end or been resettled onto another trust the beneficiary is entitled to ask for any documents that relate to the winding up or resettlement of the trust.

A trust is wound up when it comes to an end.  A resettlement occurs when the assets of a trust are transferred to another trust.

If the trustee won’t provide the information requested a beneficiary can apply to Court for directions that the trustee must provide the information requested.

The reason beneficiaries are entitled to receive information is to enable them to ensure that the trustees is acting in accordance with the terms of the trust deed.  However, these rights will always be subject to the discretion of the court that must balance the rights of a beneficiary seeking information against the interests of all the beneficiaries, and in some circumstances, the wider family.

What information is not available to a beneficiary?

Beneficiaries are not generally entitled to see information relating to the trustee’s decision making processes as this information is the trustee’s information, not the trust’s information.

Information trustees do not have to give to beneficiaries includes:

  • the trustee’s reasons to vary, partially distribute and resettle a trust
  • the trustee’s reason to change existing policy in regard to distributions to any beneficiaries
  • details of advice given by the settlor to the trustee

However, where advice from a settlor takes the form or a memoranda or letter of wishes, the Court can, on application to it, assess whether that advice does in fact form part of the trust documents.  This is determined on a case by case basis.

Who meets the cost to apply to the Court to see information?

A beneficiary who has to file Court proceedings is not automatically entitled to have his or her costs paid.

As a general rule a beneficiary who makes a successful application is entitled to have his or her costs met, to a certain extent, from the trust.   However, as having costs met from the trust means that the beneficiary’s costs are being met from property held by the beneficiary, this is not necessarily entirely satisfactory.

In some circumstances the Court will order that the trustee meets the beneficiary’s costs, in whole or in part, personally.  Where this is the case the trustee cannot seek to be reimbursed from the trust.  Costs will be awarded against a trustee personally where the trustee has not met the trustee’s obligations to account for the trustee’s actions or to provide trust information.  The greater the failure on the part of the trustee, the greater the likelihood of a costs award against the trustee.

A beneficiary’s right to review the trustee’s decisions

A beneficiary can apply to the Court to review a trustee’s decisions or anything a trustee has done or not done.  This is a statutory right, which means that it is provided for by legislation:  see the Trustee Act 1956, s 68.

If an application is made the Court has wide powers to review a trustee’s actions and require the trustee to justify decisions made or not made.

Whether a discretionary beneficiary can apply under s 68 is not entirely clear.  However , Court decisions  to date suggest this avenue is possible where the class of discretionary beneficiaries is relatively small.

Although not supported by case law yet, if the discretionary beneficiary is also a final beneficiary, a claim may be permissible under s 68.

The administration and management of discretionary trusts in New Zealand is still relatively “new” in a legal context and for that reason, the answers to some questions are yet to be confirmed by the Court.

Court’s inherent jurisdiction to help beneficiaries

In the absence of certainty regarding whether a discretionary beneficiary can seek help under the Trustee Act it is important to appreciate that the High Court also has an “inherent jurisdiction” to assist beneficiaries where the trustee has failed to do so.

What if all the trust’s property is gone?

If a trustee has disposed of trust property in breach of trust, a beneficiary can re-claim that property from the trustee.  Where the property has been disposed of the beneficiary can trace the trust property and claim the beneficiary’s proportionate share against property purchased with the trust property.

What do if you have more questions

Trust law is a complex area.  If you have a question about a trust you can ask your trust adviser to assist.

If you do not have a relationship with a lawyer or adviser with trust experience you can seek assistance from Vicki Ammundsen, who is a director at Vicki Ammundsen Trust Law.  Vicki can be reached at vicki@vatl.nz

If you want to look at more trust resources the following publications may also assist:

Vicki Ammundsen, Taxation of Trusts, ed 2, CCH New Zealand Limited (2011)

Vicki Ammundsen, The Trustee’s handbook, ed 3, CCH New Zealand Limited (2011)

Top 100 Questions on Trusts, ed 2, CCH New Zealand Limited (2008)

Other references



107 thoughts on “Beneficiary rights

  1. Can the trustee deny the beneficiary rights to use assets in the trust?

    Posted by Carol | September 16, 2012, 4:52 pm
    • If the trust is a discretionary trust, the beneficiaries only have the right to be considered, that is the beneficiairies are only benefitted to the extent the trustees choose to. However, if the trust is a fixed trust, or the trust’s assets has vested in the beneficiaires, then the beneficiaries will have enforceable rights in trust property.

      Posted by vickiammundsen | October 10, 2012, 12:36 pm
  2. If Trustees are beneficiaries can they exercise their dicretion in their own favour if the deed does not specifiacally provide for this?

    Posted by Jon Philip Smith | October 28, 2012, 9:16 am
    • This question raises a number of issues. While a trustee can, and in New Zealand at least, commonly is a beneficiary, in exercising a discretion in favour of a trustee/beneficiary not only is it necessary to confirm the requisite power to do so; in the event the approach is taken (as is often the case), that the trustee will not vote in his/her favour – this requires reference to whether the trustees’ decisions must be unanimous. The consequences of a trustee not voting, because of concerns regarding impartiality, can make the decision void. See Dever v Knobloch [2009] NZHC 2013, which considers this point.

      As a practical matter, where the deed is unclear or there is a conflict between the decision making requirements and the terms of the deed, the deed should be varied to confirm that a trustee can make a decision in favour of the trustee/beneficiary. However, where a deed does provide such a provision there should be also be a requirement that the trustee cannot do so if a sole trustee; and there should also be a requirement that there be an independent trustee.

      Posted by vickiammundsen | November 16, 2012, 9:28 am
  3. I have a Trustee who bullies and says I have no rights as a beneficiary to the Trust property in the estate. While the property is left abandoned and not maintained who is responsible to check on the property?

    Posted by Carol | November 17, 2012, 6:34 am
  4. Can a person be the ONLY Beneficary as well as the trustee?

    Posted by Min Han | February 7, 2013, 2:47 pm
    • A trustee can be a beneficiary and a beneficiary can be a trustee. However, a trust cannot exist where the settlor, trustee and beneficiary are all one and the same person. If the legal and equitable ownership of the trust property are all held by the same person it is not possible to demonstrate the separation of ownership necessary to find the foundation for the existence of the obligations owed by the trustee to the beneficiary and for the beneficiary to enforce the beneficiary’s rights against the trustee. The existence of these rights and obligations are fundamental to a valid trust – as a trustee acts personally (there is no separate trust capacity) where the trustee and beneficiary are one and the same (and there are no further trustees or beneficiaries) there cannot be a trust.

      References:New Zealand Master Trusts Guide, ed 3 at 2.1.3

      Posted by vickiammundsen | February 9, 2013, 3:09 pm
  5. Thank you for your comment outlining your frustrations with how your partner’s estate is being handled. You may wish to consider appointing a lawyer to represent your interests in this matter.

    Posted by vickiammundsen | April 6, 2013, 5:06 pm
  6. How soon after year end must trust accounts be completed? and if a trustee willfully fails over a period of time to provide these, could this be considered reach of trust?

    Posted by Leon Coy | May 13, 2013, 10:18 am
    • If the trust does not have a tax agent the accounts should normally be completed within six months of the end of the income year so that the trustee does not lose the opportunity to pay out beneficiary income. Where the trust has a tax agent the period is extended to a year. Where accounts are not prepared the trustee will likely be in breach of the trustee’s fundamental duty to account to the beneficiaries for the administration of the trust. Also, where accounts are not prepared in a timely fashion the question of penalties and the trustee’s liability for income tax must also be considered.

      Posted by vickiammundsen | May 21, 2013, 12:05 pm
  7. Can a beneficiary fire workers employeed to work for the trust estates, such as a farm if they believe the worker is costing the trust more money that it is making? Also if a trustee gives this worker free grazing but will not allow actual beneficairys free grazing on the land?

    Posted by Rebecca | May 18, 2013, 11:05 am
    • We presume that the employment relationship is between the farm worker and the trustee employer and so, no, in that circumstance the beneficiary does not have the direct right to intervene in the employment relationship. Instead the beneficiary should advise the trustee employer of the beneficiary’s concern with the arrangement and the utilisation of trust property.

      Posted by vickiammundsen | May 21, 2013, 11:54 am
  8. Does the beneficiary have a right to have the Trust hire an attorney for the beneficiary if he presumes the Trustee is ridiculously spending?

    Posted by carol | May 22, 2013, 4:02 am
  9. What happen’s if previously the director of the trust past’s away, says there is no outstanding debt. Yet step mother and representative 7 months after death come up with a deed document show borrowings. He borrowed from her and she borrowed from him, years later.
    She borrowed more than he did.
    Is there any register or way of finding out if funds were paid back to her? Is there a deed registry in NZ that shows when a payments released?

    Posted by Vanessa | August 2, 2013, 12:56 am
    • Trusts have trustees not directors – are you perhaps talking about the director of a corproate trust? There is no register of family trusts in New Zealand.
      The answer to your question should be in the trust’s accounts.

      Posted by vickiammundsen | August 2, 2013, 4:49 pm
  10. I have one, a family trust,
    Parent died last year, i am not informed of house being sold, money going out to the other sibling,
    I have requested a few times to recieve from trust a car for good reason, and get told no everytime, yet the other sibling that benifits from the trust has had a car, home deposit and is part of all the decisions/property an asset moving but is not a trustee.

    Is there any way for me to contest the desisions? Or see the asset transfers? Without going through a court?

    Posted by Reece | October 15, 2013, 12:56 am
    • As a beneficiary of the trust you are entitled to see the trust accounts and to request information about the operation of the trust. Information that beneficairies can request includes the deed of trust and any deeds of variation, the trust’s accounts, details of all distributions of capital and income and who the distributions were made to (distribution is another term for payment) and full details of the trust’s assets and liabilities.

      As a beneficiary you have a right to seek assistance from the trustees. However, if the trust is a discretionary trust (most family trusts are) the trustees can generally decide which beneficiaries to favour (and which not to).

      If the trustees will not provide the information you request you may wish to seek legal advice. However, in the event the trustees continue to refuse to provide the information requested (without a satisfactory reason) you may have no option but to instigate court proceedings. In this regard it is noted that such proceedings are rare and meerly filing proceedings usually results in not only the information that has been requested, but in some instances, costs awards against the trustees.

      Posted by vickiammundsen | October 15, 2013, 9:43 am
  11. Under the Probate code if a Trustee favors a particular Beneficiary Isn’t the trustee in Breech of Trust? I have the very same situation and have seemed legal advice and waiting for a hearing.

    Posted by jacqueline | October 15, 2013, 3:01 pm
    • Trustees of testamentary trusts have some different duties and obligations compared with trustees of discretionary trusts. The trustee of a testamentary trust, generally has no discretion and must follow the will-maker’s instructions. By contrast the trustee of a discretionary trust generally has the discretion to choose which if any beneficiaries can benefit from the trust.

      Posted by vickiammundsen | October 16, 2013, 9:56 pm
  12. If the Trust states that is to be divided into 2 shares but the Trustee does not do so instead distributes more towards the other beneficiary, What will the court do?

    Posted by Jacquelyn | October 17, 2013, 4:41 pm
  13. What are the rights of a discretionary beneficiary? If the discretionary beneficiaries are overseas, can they go to court for their interests should the only trustee pass away?

    Posted by Sam | October 28, 2013, 10:01 am
    • A discretionary beneficiary has rights of consideration and rights in respect of trust informationn. If a beneficiary has concerns as to whether or not the beneficiary’s interests are being adequately considered it may be appropriate to apply to the High Court for the appointment of an appropriate trustee (and if necessary the removal of a current trustee).

      Posted by vickiammundsen | October 28, 2013, 10:29 am
  14. I was widowed in 2010, my partner was a beneficiary of his fathers family trust. Due to a falling out his father and I have had I am concerned that our children will now be excluded from being considered for benefits from the trust. So I guess my question is, can beneficiaries be removed from a trust? If he is still listed, will his benefits go to the children or his estate?

    Posted by Karen | June 10, 2014, 2:40 am
    • Whether or not beneficiaries can be removed depends on the terms of the trust. Beneficiairies have a right to request a copy of the deed of trust, a review of which should answer your question. Regarding the position in respect of their father, if say he was a final beneficiary (that is a beneficiary who receives trust assets when the trust comes to an end), any distribution that would be made to him might be made to his children instead. Again this will depend on the terms of the trust.

      Posted by vickiammundsen | June 10, 2014, 12:48 pm
  15. Hi
    I receive $90 per/wk from my family Trust ‘The Genset Trust’ since I left home.
    My Trust is now worth over $30 million and my parents are the trustees.
    I don’t feel I’m been considered as not even my daily basic needs are met.
    I’ve spent a year trying to get my Trust deed though lawyers.
    The Upper Hutt lawyers that hold the deed write quote ‘we don’t give out any information, we never do’ this is entirely unhelpful and Im told by my lawyer the only thing is now to take them to court. This will cost from $7000 so seems impossible.

    Posted by Veronica | August 3, 2014, 10:40 pm
    • We refer yuo to clause 5.46 of the Review of the Law of Trusts – a Trusts Act for New Zealand, which provides that “There cannot be any obligation, and hence there cannot be any trust, if the trustee does not owe a duty to account to any beneficiary. To be able to hold a trustee to account, beneficiaries need to know that they are beneficiaries of the trust and need to be able to be provided with trust information on request. … The decision as to whether a particular beneficiary is entitled to be notified that he or she is a beneficiary or is entitled to receive trust information on request has been found by the Privy Council in Schmidt v Rosewood Trust to be something that is within the court’s inherent jurisdiction to supervise the administration of trusts. Based on this decision, which was followed in New Zealand in Foreman v Kingstone,the courts will apply the principle that a beneficiary should be notified of or provided with the information that is necessary to enable the trust to be enforced.”

      While there are circumstances where it may not be appropriate for the trustees to provide information the only practical option to advance matters is to file court proceedings, while there are costs associated with this, it is the only way that the matter can be advanced if the trustees are not agreeable to providing you with the information that you require (trust deed, trust accounts etc). In this regard it is noted that trustees who do not provide trust information can be personally liable to meet the costs of failing to do so. If you have not done so already you may wish to consider appointing a lawyer to act for you.

      Posted by vickiammundsen | August 4, 2014, 2:02 pm
  16. My husband is a beneficiary of a Bare Trust which holds commercial property. The Trustee is a Company and the Directors of that Company will not act on my husband’s request to remove his shareholding out of the Bare Trust. The Directors just ignore all requests. What can we do? One of the Directors of the Trust Company has been living in one of the properties, even though he is a beneficiary and no other beneficiary has received the same benefit. My husband just receives a Special Purpose Financial Report for the Property Syndicate, which contains very little information. They are corrupt individuals and we don’t trust them anymore. We have put a caveat over the properties as they were attempting to sell them without my husband’s consent.

    Posted by Lisa | August 27, 2014, 1:29 am
    • It is important to appreciate the difference between the rights of beneficiaries and the rights and obligations owed by trustees. While beneficiaries can indicate their wishes, it is the trustee that makes the decisions regarding trust property. As you describe this trust as a bare trust, it is less clear what discretion the trustee might have. In a conventional sense a bare trust exists where property is held by a trustee on the basis that the trustee will transfer the property when / as directed. However, based on your comments the trust appears to be operated as a discretionary trust. Also, given the concern expressed regarding the trustee’s actions your husband may wish to consider seeking the removal and replacement of the trustee. Legal advice should be sought to clarify the options.

      Posted by vickiammundsen | August 27, 2014, 10:08 am
  17. hi one of our family beneficiaries asked our trustee if she could have access to trust documents,the trustee said yes what the beneficiary did next was photo copy some of the minutes from a few years ago keeping in mind that this was brought up in the minutes with no decision the question was asked to allow 2 ex-beneficiaries back into the trust the beneficiary brought this up at the last meeting and presented the copied documents
    can this beneficiary be prosecuted for fraud?

    Posted by les harmer | January 12, 2015, 5:33 pm
  18. “As a beneficiary of the trust you are entitled to see the trust accounts and to request information about the operation of the trust. Information that beneficiaries can request includes the deed of trust and any deeds of variation, the trust’s accounts, details of all distributions of capital and income and who the distributions were made to (distribution is another term for payment) and full details of the trust’s assets and liabilities.”

    What is the source of this? I need to cite it. Thanks!

    Posted by NZBeneficiary | January 18, 2015, 2:47 pm
  19. If the settlor of a discretionary trust passes away and the trust is active til 2025 can the trustees appointed sell up properties etc and disperse of the trust early?

    Posted by Ang | February 3, 2015, 1:47 pm
  20. I am a beneficiary in a trust in which the trust composition is comprised of two trustees, lawyers from the same firm and a trustee who happens to be a beneficiary. I have asked the trustee (lawyer) for a statement of trust assets and any variations from the original trust deed, he has refused on the basis he has not been authorised to release the information, does he have any legal grounds to withhold this information?

    Posted by John Drag | February 16, 2015, 11:09 pm
    • An increasingly common scenario. Where there are three trustees, unless the deed provides for majority decision making, all of the trustees will need to be in agreement to release the information that you have requested. However, in the event that the trustees continue to refuse to provide the information requested you can consider the option of seeking court directions. While this course of action is not without cost; where trustees have not provided information that a beneficiary is entitled to see in a timely fashion, there is a significant risk that the trustees could be required to meet the beneficiary’s court costs.

      Posted by vickiammundsen | February 20, 2015, 8:35 pm
  21. If a trust is wound up and final distributions of assets are made at a given date and a year later further cash assets (circa 100k) belonging to the trust are discovered can the trust be re-opened to make a further distribution? Is this clear cut or what are the difficulties in law with this scenario if any. Is their case law to support a further distribution?

    Posted by Derek | February 25, 2015, 3:56 pm
    • The further assets must be distributed as they are still held for the beneficiaries pursuant to the terms of the trust. The fact that the trust was wound up does not negate this, and as all of the assets have not been distributed, the trust has not been wound up. Care will be required to establish what discretion the trustees have regarding how these assets are distributed. Legal advice is recommended.

      Posted by vickiammundsen | February 27, 2015, 8:03 am
  22. ‘However, if the trust is a discretionary trust (most family trusts are) the trustees can generally decide which beneficiaries to favour (and which not to).’

    What specifically, do you mean by ‘favour’ above?

    Thank you.

    Posted by Margot Duane | March 5, 2015, 8:57 am
  23. > “However, if the trust is a discretionary trust (most family trusts are) the trustees can generally decide which beneficiaries to favour (and which not to).”

    What did you mean by ‘favour’ above?

    Thank you.

    Posted by Margot Duane | March 5, 2015, 8:58 am
  24. I am the executor of my father’s estate. How can I ascertain what his assets were? (I have no access to his records and reside overseas.) Thank you.

    Posted by NZExecutor | March 5, 2015, 11:24 am
    • It is the executor’s job to identify all of the assets and liabilities of an estate. It is not possible for the terms of the will to be complied with before this is done so. If the executor is unable to do so, it may be appropriate for the executor to renounce the appointment and for an executor to be appointed who is able to do so.

      Posted by vickiammundsen | March 9, 2015, 10:49 pm
  25. > Distributing income or capital.

    ‘Favour’ implies (to me, at least) that such distributions don’t have to be equal. What if equal distribution among siblings is stipulated for in the Trust deed? Thanks.

    Posted by NZExecutor | March 5, 2015, 11:42 am
  26. To dissolve a Trust: Is there a signature necessary witnessed by an Solicitor of the High Court of New Zealand? I’m living as an Kiwi in Germany.

    Posted by Kaus Salmen | April 26, 2015, 12:15 am
  27. my trustee died, can he leave his son in charge now?

    Posted by Sarah | April 27, 2015, 8:43 pm
    • When a trustee dies – whether or not the trustee can appoint his son as new trustee depends on the term of the trust instrument. So the first question might be are there other trustees? Next question might then be – is there a minimum number of trustees? Once those questions are addressed it may (but not necessarily) require the appointment of a new trustee – how this is done will be in accordance with the trust document – if that doesn’t provide the answer – it may be necessary to revert to the Administration Act or the Trustee Act. It may be that the terms of the trust document allow the appointment of a new trustee by will or by deed. However, more information and enquiry is required to answer your question.

      Posted by vickiammundsen | May 18, 2015, 10:53 pm
  28. Hi there,
    Long story short.
    at a recent Meeting, all land owners who attended, said no/ disagreed with the topic, and the final outcome , the Trustees said ok/agreed “against” the land owners /beneficiaries.
    Note; the Trustees did not inform the beneficiaries with the final outcome.
    I had to contact them for an answer.

    is it legal for a Trustee to go against land owners/ beneficiaries?

    Any help will be much appreciated.

    Posted by Tane Lawless | May 15, 2015, 9:07 pm
  29. When making a high court application to try and remove a trustee what length of time would you expect it to take until you could get a hearing form point of application. Thanks

    Posted by jeff mcmiken | May 25, 2015, 5:19 pm
    • It depends on the nature of the application. Where there are grounds for urgency applications can be heard very promptly. Otherwise the time frame can be significantly longer – but this will depend on which court and the issues. 12 to 18 months might be a reasonable time-frame to allow for.

      Posted by vickiammundsen | January 2, 2017, 7:51 pm
  30. Hi Vicki, could a company become a discretionary beneficiary under a trust?

    Posted by Michael | June 5, 2015, 10:57 am
  31. Hi I’m currently managing my 7y old daughter trust from her father who passed away but having some problem with the way trustee is handling and rejecting most of my requests so i wanted to ask where can i go to ask for help or assistant so dat they can deal with them cause I’m tired of how they don’t want to help even when the money is enough

    Posted by mulalo | July 4, 2015, 11:23 am
  32. As the Settlor of a Family Trust (Discretionary), and also Co-Trustee (the only other Trustee is a Solicitor acting in the capacity of a Trustee Company, and with limited liability clauses applied in their Trustee capacity within the Trust Deed) can the Settlor demand that the Trust be “wound up” or the assets divested well before the 80 year Trust end date, and thus demand that the proceeds then made available to the Preferred Beneficiary (which in this case would also be the Settlor)? Any discretionary beneficiaries would then not become beneficiaries given that the assets of the Trust had been removed by the Settlor/Preferred Beneficiary, for whatever purpose. In this particular case, being both the Settlor, Co-Trustee and Preferred Beneficiary, we presume that we maintain the most favourable position possible BUT this position is suddenly turned on its head 180 degrees in the event of my death, and suddenly the Trust assets are controlled solely by a Solicitor who has no obligation to look after the interests of any Discretionary Beneficiaries, and may seek to favour the remaining Trustee in any way they so wish – or to some unfavourable degree according to any Discretionary Beneficiary potentially. Therefore to eliminate an unfavourable outcome for the Class 1 Discretionary Beneficiaries post the death of the Settlor/Preferred Beneficiary/Co-Trustee, would it not be wise to wind up the Trust and then re-write the trust deed with provisions that favour the intended persons who are the children of the Settlor/Preferrred Beneficiary/Co-Trustee, whom based on the content within the Trust Deed are basically going to be placed at the mercy of the other Trustee in all respects, when this is definitely not the intention of the Settlor, but has occurred due to the Solicitor (and co-Trustee) having provided the entire Trust Deed, and such appears to be severely tilted in favour of the Solicitor in terms of the powers vested within the Deed, due mainly to us being somewhat naieve some years ago when the Trust Deeds were drafted up by the Solicitor and presented to us as being simply a “‘standard deed”, but upon recent inspection appear to favour the Trustee much more than any beneficiary….which could place the beneficiaries at risk from gaining either the assets or any regular distributions via the Trust. I have thought about simply inserting a clause within the deed which automatically elects all beneficiaries to Trustee status immediately upon the death of the Settlor, on equal terms no less than the other Trustee (our current Solicitor), and then insert another Clause which provides for any 2 Trustees to be permitted to make decisions pertaining to Trust assets, without the consent of the 3rd Trustee (adopt a majority rules policy).
    However in reviewing the Trust deed, it appears to favour the existing Co-Trustee so significantly that a complete overhaul of the Trust deed would be necessary to adequately protect the interests of the intended beneficiaries (who remain at this time as discretionary only). Even if we upgraded the status of the beneficiaries from “Discretionary” to “Preferred”, I would not feel comfortable. And if we overhaul the Trust Deed in the manner we would feel comfortable to adequately protect the children as beneficiaries, then the Solicitor (Co-Trustee) would see clearly what we were doing and therefore I sense he would become unhappy and such could end our association as client/solicitor and also our positions as joint Trustees could become somewhat tense given my seeking to tighten up the Deed significantly, to the detriment of the Solicitor obviously…so can we bail out and simply have all assets transferred into another existing or newly formed Trust which would encompass my wishes more favourable onto the beneficiaries if I passed away suddently, or is this process unable to occur due to some legal reason? None of the 5 Trusts involved have any debts, only assets. Hope you can help? Thanks in advance. Gavin

    Posted by Gavin Perry | July 22, 2015, 4:12 am
  33. i am 21 i want to use my trust fund but it says i have to be 25 i have a baby on the way and want to buy a house my mum who left me it died 3 years ago my nana who is a trustee will allow my brother who is 24 to use it to buy a house even tho he allready owes one i do not want to spend 40k on rent in the next 3 years and would rather be saving for my kids future if any one can help me out i would be verry thankfuk

    Posted by connor | September 21, 2015, 11:13 pm
  34. I am the beneficiary to my fathers trust he left my brother and I for when we reach the age of 25. Is there anyway I can find out what his assists and estate were at his time of death and of the trustee is wrongfully spending what is rightfully mine?

    Posted by Shannon | November 4, 2015, 7:45 pm
  35. Is the x partner of one of the beneficaries able to get anything out of the family trust.Are they intitled to assets/money because they had been married for over 15years? It is written up that they don’t be included financially so therefore could they break in to the trust get anything?

    Posted by Miss Gray | December 29, 2015, 3:50 am
  36. Hi there, we are in the process of winding up our family trust which owns a company that owns several properties. We are going to distribute the properties to the beneficiaries of the trust since our father has passed away 5 months ago.
    The properties will be transferred to the trust then distributed to the beneficiaries then the company liquidated and the trust wound up also.
    We have an independent trustee who is a lawyer, a shareholder of the company and also one of the executors of the will (as am I). We are concerned that the lawyer, being a shareholder in the company and a trustee could drag the distribution process out or even worse be entitled to a share of the estate, even though he is not a beneficiary.
    Could this happen ? And is there a reasonable time frame for estate distribution ?

    Posted by Lynette Kelland | January 12, 2016, 11:54 am
    • The time-frame for the distribution of an estate depends on a number of factors. However, when a significant period of time passes without the estate being distributed it may be necessary for the trustees to be replaced with trustees who will be able to better progress the distribution of the estate. See Harvey v Harvey (1996) 1 NZTR ¶6-003

      Posted by vickiammundsen | January 2, 2017, 7:13 pm
  37. Hi, can a trust have only one trustee? Or does it have to have 2 or more? And do I HAVE TO include an ‘Independent trustee’ aswel(lawyer,accountant…)??? Or am I able to just appoint anyone?, And after the initial lawyer fees to set everything up, are there any ongoing fees afterwards ??? And are there any limits to what I can put in the trust deed terms? Thanks

    Posted by s.i | January 22, 2016, 5:49 pm
    • A valid trust can exist where there is a single trustee who is not independent from the trust. However, as a practical matter, risks can flow where the settlor retains too much power. See Clayton v Clayton [2016] NZSC 29

      Posted by vickiammundsen | January 2, 2017, 6:57 pm
  38. Does the settlor have any power over the trustees, say If they implement terms into the ‘trust deed’ that he/she the settlor is to have the power to remove or replace the trustee??? Is it possible?

    Posted by s.i | January 22, 2016, 6:22 pm
  39. Parents set up an irrevocable trust fund, which is released on both parents demise to three beneficiaries. Parents are not trustees, only grantors. Trustees are a financial company service. Three beneficiaries are all siblings and adults. One beneficiary has been requested (by parents) to sign to dissolve the trust fund, without the knowledge or signature of the other two beneficiaries. Can the fund be dissolved in this manner? And if so is the one beneficiary liable for future claims by the other two beneficiaries for causing them determent?

    Posted by KCbeneficiary | February 22, 2016, 10:46 pm
    • Given your advice that the trust is irrevocable it seems unlikely that the trust can be revoked in the manner you suggest. Where a trustee has acted in breach of trust, it is the trustee who is generally answerable for the breach and any losses that might flow from it.

      Posted by vickiammundsen | January 2, 2017, 6:53 pm
  40. can i sell my share in my trust i am the trustee and beneficiary

    Posted by Graeme Case | April 5, 2016, 3:10 pm
  41. What are the rights and responsibilities of an income beneficiary? Are they able to give trust money to a one captial beneficiary and therefore favour that beneficiary over others? If so would any payments need to be repayable/taken into account when final distributions are made?

    Posted by Margaret | April 15, 2016, 11:17 am
    • Beneficiaries have no responsibilities as such, benefitting by virtue of being beneficiaries. However, trustees of a trust where there are income and capital beneficiaries must balance the rights of the income and capital beneficiaries. See Manukau City Council v Lawson (No 2) (2000) 1 NZTR ¶10-009 where Paterson J points out that the duty of trustees to act with strict impartiality between income and capital classes of beneficiary is “a well established principle.”

      Posted by vickiammundsen | January 2, 2017, 6:02 pm
  42. My first question :
    I have a Friend who would like to wound up her family trust she is the Settlor of the trust , trustee and also the beneficiary ,the brother is the other trustee does she need the Approval of the beneficiaries ( her two daughters on this case ) to wound up the family trust ?.
    My Second question :
    While the above person ,Settlor,trustee and also beneficiary is alive and using the Family trust as Homestay ( getting an income for Herself ) can the Beneficiaries (her Two Daughters ) get together and force the sale of the House and get their share of the trust .
    Thank you for your help on this Matter

    Posted by Gerard Averous | May 15, 2016, 10:35 pm
    • The answer to each of your questions can be found in the terms of the trust. However, by way of general observation trustees act in accordance with their discretion. Further, beneficiaries have no “share” of a trust unless or until the trust vests, in which case the final beneficiaries receive the trust property in accordance with the terms of the trust.

      Posted by vickiammundsen | January 2, 2017, 5:53 pm
  43. We have a will that leaves house to 5 and can only be sold if all 5 agree. The only trustee has let one person live for free in house for over 3 years and spent most of the money from bank account on house, again only benefiting one person. We get no correspondence from him and he won’t answer questions. Arnt all 5 supposed to benefit?? And can he order house to be sold on grounds of unworkable situation?

    Posted by Margo donnelly | May 25, 2016, 11:51 am
    • If the trustee of the estate is not acting in the best interests of the beneficiaries it may be appropriate to seek the removal of the trustee and the appointment of another trustee. See Re Estate Farnsworth (1999) 1 NZTR ¶9-001 and Harsant v Menzies [2012] NZHC 3390

      Posted by vickiammundsen | January 2, 2017, 5:47 pm
  44. Hi I have a question about our family trust I have three sisters and myself . We have shares in Farm land and money coming from rent of the land is going into that trust account am i myself entitled to my share to be transferred to my own account .

    Posted by Rangi Reihana | July 27, 2016, 12:43 am
    • The starting point for this enquiry would be to raise this with the trustee. Alternatively if all of the beneficiaries wish to terminate the trust (and they are all adults) you may wish to explore whether the rule in Saunders v Vautier might be of assistance.

      Posted by vickiammundsen | January 1, 2017, 11:55 pm
  45. Ok so my grandfather left me a prepaid college fund so I would be able to do well once I grew up im the beneficiary and my mother is the trustee, my grandfather is currently deceased, now I do attend my college but I’m also a little behind on car repairs and a couple bills when I asked my mother to let me take a portion out she declined, but before I attended college I didn’t want to go and she was about to transfer it to my uncle so he could pay off his car, so I decided to go to at least have what’s mine, would she be in breach of the trust for doing an act like that for punishment for me refusing to want to attend that year to work a full time job instead? I’m also 21 years of age and was wondering if I could somehow make myself a trustee. Please hit me back and thank you- tanner

    Posted by Tanner W Furr | August 1, 2016, 9:35 pm
    • Thank you for your e-mail. Trustees are obliged to act in accordance with the terms of the deed of trust. Where trustees act capriciously or for motives other than the best interests of the beneficiaries the trustees can be in breach of trust. As to whether you can become a trustee, this will depend on the terms of the deed of trust.

      kind regards,

      Posted by vickiammundsen | January 1, 2017, 11:58 pm
  46. Hello, I want to check that the information contained in this document is still current. My father set up a family trust and is now in a rest home. My brother is acting as POA and my father’s friend is the Trustee of the trust. Both are denying me access to information. I believe my brother has been taking money from the trust, and I know that very poor financial decisions have been made e.g. not applying for the rest home subsidy when my parents went into a rest home (my mother has since passed away). I am now going to send a letter by registered mail to the Trustee requesting to see the Trust Account and Deeds of Trust and any Variations of Deed of Trust. Do I have a right to this information. I am being told that I am not. Thanks

    Posted by Christina Gera | August 3, 2016, 11:03 pm
    • A beneficiary can seek information from trustees about the trust. Whether or not the trustees provide the information requested is at the trustees’ discretion. Where trustees will not provide information about the trust a beneficiary can seek the assistance of the court. See Erceg v Erceg [2016] NZCA 7 (under appeal).

      Posted by vickiammundsen | January 2, 2017, 5:41 pm
  47. How. Do you change a trust, or desolve the trust as not a benefit to you anymore, as was started only when the trust stopped house from being sold, if one partner went into a home, one partner has died, so trust not a benefit, how to close, and just put in the will.

    Posted by Mrs Kitchen | September 2, 2016, 1:45 pm
    • The starting point will be to discuss your wishes with the trustees. It would also be prudent to review the terms of the trust to establish whether the trust vesting date can be brought forward. However, before doing so it would be wise to establish what your position will be if the trust is wound up (presuming the trust property is distributed back to you) and you require long term residential care.

      Posted by vickiammundsen | January 2, 2017, 5:38 pm
  48. A friend was used as settlor. Now parted ways and moved on. What next?

    Posted by Julia Alcorn | September 10, 2016, 3:15 pm
    • Thank you for your question. The identity of a settlor is a matter of fact. However, once settled a trust can exist independently of the settlor. That said, it is important to consider the terms of the deed of trust to establish whether any powers have been reserved to the settlor such as the appointment and removal of trustees and beneficiaries.

      Posted by vickiammundsen | January 2, 2017, 12:05 am
  49. Can a beneficiary of a trust, that has a Protector provision allowing Protector to remove a Trustee, direct Protector to remove trustee if Protector finds that the trustee acted in bad faith with regard to the purpose of the Trust? If not, can the Beneficiary express a desire that the Protector remove the Trustee?

    Posted by Link | November 3, 2016, 7:10 pm
  50. My auntie from my grand-father’s second parter made a succession to my grand-father’s land and formed a trust in 1999..She told me and my brother.. (We are from his first marriage)That she put use in the trust..she is the Administrator and a Hone Raurangi (There is no such person)how would i find out if i am a beneficiary seems I can’t find her.haven’t heard from her since 1999

    Posted by Maxine Hona | November 16, 2016, 11:32 pm
    • Thank you for your e-mail. The starting point is to establish whether or not a trust was settled and if so who the trustees are. To do this you may wish to review the titles of the land in question to establish who owns the land and whether they own the land personally as trustees. We recommend that you seek legal advice.

      kind regards,

      Vicki Ammundsen

      Posted by vickiammundsen | January 2, 2017, 12:01 am
  51. If a beneficiary is bankrupt in a family trust, can the IRD seek compensation from the trust before the death of the testator ?

    Posted by smo | January 23, 2017, 12:18 pm
    • It is unclear as to whether you are referring to a family trust or a will. By way of general comment presuming it is a family trust, whether or not creditors can make a claim against the trustee(s) will depend on the nature of the beneficiary’s interests in the trust. For example if the beneficiary had a current account when the beneficiary went into bankruptcy the right to that current account would pass to the official assignee. Legal advice is recommended.

      Posted by vickiammundsen | January 23, 2017, 5:54 pm
  52. Would it be perceived fraudulent to ask my family members to remove my name as a beneficiary( from a family trust/or will) in order to avoid creditors accessing funds due to my personal bankruptcy? Would those family members be charged with fraud?

    Posted by smo | January 23, 2017, 11:21 pm
    • Whether or not you can be removed as a beneficiary of a family trust will depend on the terms of the trust. Legal advice is recommended. Also see the High Court and Court of Appeal decisions in Erceg v Erceg regarding the impact of bankruptcy on the rights of final and discretionary beneficiaries.

      Posted by vickiammundsen | January 24, 2017, 7:40 pm
  53. Do I, as a beneficiary, have a right to view the tax returns (or copies of) which the trustee has filed for a trust that is making passive income in term deposit accounts?

    Posted by Britta | January 26, 2017, 10:06 am
    • You can ask the trustees for the tax returns. Whether they are supplied or not is up to the trustee who has the discretion as to what information to provide to a beneficiary. See the Court of Appeal decision in Erceg v Erceg (subject to appeal) and also the draft Trusts Bill.

      Posted by vickiammundsen | January 29, 2017, 9:43 pm
  54. Where a trust has been formed by a husband before a second marriage which includes the family home, upon the death of the husband what can the spouse do when she has no home of her own to move to ?. Can she make a claim against the trust? The beneficiaries of the trust are the husbands children from his first marriage. There are no children from the second marriage.

    Posted by David Mairs | February 20, 2017, 2:21 am
    • Thank you for your enquiry. There are various avenues for remedies in the situation that you describe. By way of general observation these could include a constructive trust claim on account of advances made to the trust in the expectation of a benefit from the trust and relationship property claims in respect of dispositions of property onto the trust that are referable to the relationship. That said prevention is better than cure and if it is not too late it might still be possible to formalise some rights for the surviving spouse. Legal advice is recommended.

      Posted by vickiammundsen | February 20, 2017, 8:10 pm
  55. I am a beneficiary of my mother’s estate and trust. My two siblings were EPoAs and one of them a co-executor of my deceased mother’s estate. They have insisted on me signing a Deed of Release before uplifting some chattels. This states: “On the basis that the executors attend to the distribution and finalisation of the residuary estate…the beneficiaries undertakes…Distribution to me of the personal chattels that have been allocated to me…will be in full and final settlement of my share of the estate and in consideration of receipt of the chattels I release and discharge the executors from all trusts in respect of my share of the estate.”
    I am in a situation where I believe they abused their responsibility as attorneys in that they progressively removed chattels from my mother, who had dementia, over several years, such that most of her possessions were not on the list of chattels. i.e. I believe her estate should have included far more. If I sign this document to secure the few items distributed to me, before they are discarded, then does that preclude me from making a claim to the courts for their conduct as EPoAs.

    Posted by Sibling | February 22, 2017, 2:35 pm
    • The Deed of Release should not be signed without seeking legal advice and canvassing with your lawyer whether you should take any action for a review of decisions made by your late mother’s attorney(s). You may also need legal advice regarding the trust you refer to eg who are the trustees of that trust and what assets are owned by this trust.

      Legal advice should be sought.

      Posted by vickiammundsen | February 22, 2017, 3:01 pm

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