trustee liability

This tag is associated with 7 posts

The Price of Principles

Principles are important. But who should fund them? When acting as a trustee, it is generally accepted that the trustee will be reimbursed by the trust for any costs incurred.  However, it is important to appreciate that this principle has a caveat – the costs must be reasonably incurred. New Zealand Māori Council v Foulkes … Continue reading

1 of 2 Trustees personally liable

Guarantees are a common part of commerce.  In a practical sense they are often unavoidable.  Shareholders guarantee loans to companies; settlors guarantee loans to trusts – there is a certain symmetry because the shareholder or settlor is able to ultimately benefit from the advance.  But what about when the trustees who are asked for a guarantee cannot … Continue reading

Trustee liability

I write a lot about trustee liability.  The reason for that is simple – there is lots to write about.  Being a trustee is a risky business, and sadly many trustees are not sufficiently aware of the risks of trusteeship. For trustees or advisers who want to be better informed I have written a book … Continue reading

Trustees can get bankrupted too

It is not often appreciated that trustees act personally.  This means that if a trustee defaults on a financial obligation, if the trustee is a natural person, that person can be bankrupted.  This point was considered by the High Court in the recent decision in the Bankruptcy of Thomas Joseph Brown where the Court confirmed that a … Continue reading

How to lose control of trust assets in three easy steps

The recent case of Rabson v Gallagher provides an excellent example of how not to use trusts in the context of protecting property from a relationship partner. The first mistake made was to intermingle relationship property and trust property.  Where this happens any party should expect the court to ensure that the disaffected former partner is compensated.  It is entirely possible and permissible … Continue reading

How much discretion is unfettered discretion really?

Another day, another decision. Beneficiaries of new appear to be more litigious beasts than beneficiaries of old. I blame the internet. Or google. Whatever the reason, trustees need to take more care to ensure that their decisions cannot be impugned. This point is highlighted in McNulty v McNulty & Ors a case involving two beneficiaries and … Continue reading

Extent of professional trustee liablity

The New Zealand Institute of Chartered Accountants (NZICA) is warning professionals that the Inland Revenue Department (IRD) is actively pursuing trustees personally for tax debts owed by a trust, including those trustees with no personal connection or interest in the income or assets of the trust. NZICA says it is aware of a number of … Continue reading