The starting point is to review the terms of the trust to establish whether it is permissible to transfee trust assets to another trust by way of distribution or pursuant to a power of resettlement. Legal advice is recommended.
If all beneficiaries are of legal age and agreed with the trustees to the early final distribution of all of the trust assets- but the trust deed does not have a clause specifically allowing the winding up of the trust – can the trustees vary the trust by adding a clause to allow them to now wind it up if all parties agree to this?
If all beneficiaries are of legal age and consent the rule in Saunders v Vautier can have application.
The rule in Saunders v Vautier allows the final beneficiaries of a trust to bring the trust to an end provided that all of the trustees are in agreement and are of age. The rule is described in Lewin on Trusts as follows:
“If there is only one beneficiary, or if there are several beneficiaries all of full age and capacity and of one mind, the specific execution of the trust may be stayed and the special trust will acquire the children of a bare or simple trust; for through whatever channel the settlor may have intended his bounty to flow, the beneficiaries, as the persons ultimately to be benefited, are in equity and from the creation of the trust, and before the trustees have acted in the execution of the trust, the absolute beneficial proprietors. The principle applies both to a trust fund as a whole and to a particular gift out of a fund, such as legacy.”
The process will depend on the terms of the trust, the assets and liabilities of the trust and the reasons for winding up the trust – for example exercise of a discretion or because the trust has vested. Legal advice is recommended.
I am beneficiary of a family house trust and we are considering winding it up and distributing the assets. Could you give me an approximate estimation on what the legal fees would be if we dismantled the trust?
Hi. My wife & I have sold the assets of our Complying Trust & all our taxes are now complete. We want to wind up Trust so is it necessary to have a Solicitor do that , or are forms readily available to be able to do it ourselves? There are No more assets, No debts & retirement beacons!.
How to wind up the trust will depend on its terms. For example, is there a power to bring to forward the vesting date? Has Inland Revenue been advised that the trust is wound up. Advice is recommended to ensure that the trust is wound up.
When winding up a Trust what becomes all the trust records?
To take the question further,
Do the records become the property of the beneficiaries and if so, how is the preferred beneficiary selected (by the trustees?) if there is a history of divided viewpoints or even strong hostility between different beneficiaries as a consequence of their perception regarding the propriety with which the trustees have administered the Trust (and therefore the trustees may prefer certain beneficiaries to retain the documents over others);
Upon winding up the trust, which would lead to the retirement/resignation of the trustees do, or can, the trustees prevent the beneficiaries having access to all records of the trust particularly if there are certain records of the trust which the trustees would not wish the beneficiaries to see, for example documents that may evidence the failure of the trustees to abide by the terms of the trust deed, or to have been involved in collusion contrary to the interests of the beneficiaries, breaches of good faith and/or fiduciary duty, relevant laws regarding mistreatment of the beneficiaries and their legal rights, or even criminal activity?
Thank you, your question raises interesting issues. The Trusts Act 2019 does not specify the record keeping obligations once a trust has come to an end. However, as is clear from Erceg v Erceg disclosure rights and obligations do not automatically come to and end.
Thank you Vicki.
Clearly your response is light on elucidation, could you expand on it please and give more clarification? I’m sure that the questions I’ve raised can’t be the first time in the history of the Trust Act 2019 (and previous versions) where such situations have been encountered (since I didn’t invent these scenarios without some experience as a beneficiary and therefore some intelligent predictability as to the possible eventuality of such a scenario), and the courts surely will have had to deal with the question somehow.
Matters of Trust
Can a family Trust be replaced by another Trust?
Posted by Don & Doreen Coles | February 20, 2018, 7:02 pmThe starting point is to review the terms of the trust to establish whether it is permissible to transfee trust assets to another trust by way of distribution or pursuant to a power of resettlement. Legal advice is recommended.
Posted by vickiammundsen | February 20, 2018, 8:30 pmIf all beneficiaries are of legal age and agreed with the trustees to the early final distribution of all of the trust assets- but the trust deed does not have a clause specifically allowing the winding up of the trust – can the trustees vary the trust by adding a clause to allow them to now wind it up if all parties agree to this?
Posted by Kerry | May 7, 2019, 3:05 pmIf all beneficiaries are of legal age and consent the rule in Saunders v Vautier can have application.
The rule in Saunders v Vautier allows the final beneficiaries of a trust to bring the trust to an end provided that all of the trustees are in agreement and are of age. The rule is described in Lewin on Trusts as follows:
“If there is only one beneficiary, or if there are several beneficiaries all of full age and capacity and of one mind, the specific execution of the trust may be stayed and the special trust will acquire the children of a bare or simple trust; for through whatever channel the settlor may have intended his bounty to flow, the beneficiaries, as the persons ultimately to be benefited, are in equity and from the creation of the trust, and before the trustees have acted in the execution of the trust, the absolute beneficial proprietors. The principle applies both to a trust fund as a whole and to a particular gift out of a fund, such as legacy.”
Posted by vickiammundsen | May 14, 2019, 12:10 amWhere would I find the process for winding up a complying trust please?
Posted by Lavinia Mattson | June 3, 2019, 1:02 pmThe process will depend on the terms of the trust, the assets and liabilities of the trust and the reasons for winding up the trust – for example exercise of a discretion or because the trust has vested. Legal advice is recommended.
Posted by vickiammundsen | June 4, 2019, 11:47 pmI am beneficiary of a family house trust and we are considering winding it up and distributing the assets. Could you give me an approximate estimation on what the legal fees would be if we dismantled the trust?
Posted by Tonya Lilburn | June 24, 2019, 10:45 pmThank you for your enquiry. Please e-mail me on vicki@vatl.nz
Posted by vickiammundsen | June 24, 2019, 11:23 pmHi. My wife & I have sold the assets of our Complying Trust & all our taxes are now complete. We want to wind up Trust so is it necessary to have a Solicitor do that , or are forms readily available to be able to do it ourselves? There are No more assets, No debts & retirement beacons!.
Posted by Hoani Ormsby | November 22, 2020, 12:24 amHow to wind up the trust will depend on its terms. For example, is there a power to bring to forward the vesting date? Has Inland Revenue been advised that the trust is wound up. Advice is recommended to ensure that the trust is wound up.
Posted by vickiammundsen | November 23, 2020, 9:57 pmWhen winding up a Trust what becomes all the trust records?
To take the question further,
Do the records become the property of the beneficiaries and if so, how is the preferred beneficiary selected (by the trustees?) if there is a history of divided viewpoints or even strong hostility between different beneficiaries as a consequence of their perception regarding the propriety with which the trustees have administered the Trust (and therefore the trustees may prefer certain beneficiaries to retain the documents over others);
Upon winding up the trust, which would lead to the retirement/resignation of the trustees do, or can, the trustees prevent the beneficiaries having access to all records of the trust particularly if there are certain records of the trust which the trustees would not wish the beneficiaries to see, for example documents that may evidence the failure of the trustees to abide by the terms of the trust deed, or to have been involved in collusion contrary to the interests of the beneficiaries, breaches of good faith and/or fiduciary duty, relevant laws regarding mistreatment of the beneficiaries and their legal rights, or even criminal activity?
Thank you.
Posted by mark g | August 18, 2021, 6:01 pmThank you, your question raises interesting issues. The Trusts Act 2019 does not specify the record keeping obligations once a trust has come to an end. However, as is clear from Erceg v Erceg disclosure rights and obligations do not automatically come to and end.
Posted by vickiammundsen | August 22, 2021, 5:06 pmThank you Vicki.
Clearly your response is light on elucidation, could you expand on it please and give more clarification? I’m sure that the questions I’ve raised can’t be the first time in the history of the Trust Act 2019 (and previous versions) where such situations have been encountered (since I didn’t invent these scenarios without some experience as a beneficiary and therefore some intelligent predictability as to the possible eventuality of such a scenario), and the courts surely will have had to deal with the question somehow.
Posted by mark g | August 22, 2021, 8:11 pm