Family trusts a legal minefield
Family Trust king Ross Holmes is warning that self-proclaimed trust "experts" are dangerously misleading tens of thousands of New Zealanders.
Monday, February 14th 2005, 2:40PM
by The Landlord
New Zealand has an estimated 200,000 family trusts, and Holmes predicts many tens of thousands would be found to be shams if they were ever tested by the courts.And the reason is the very protection the experts are proclaiming - independent trustees.
Independent trustees have been billed as the cure-all for trusts, Holmes says. "But that's legal bullshit."
So-called experts have been expounding their theories in "novels" claiming to be guides to trusts, he says.
But in the real world, independent trustees are likely to do far more harm than good, because it is a rare trustee that performs his or her role competently, Holmes says.
Independent trustees fulfilling their duties must be involved in every decision made regarding trust assets, and they have to do more than rubber stamp them; they have to have full knowledge before making their decision, and be able to prove it by keeping minutes.
"Except with trustee companies, we have rarely seen this happen in practice," Holmes says.
That means trusts' decisions can be set aside in court as invalid, just when the settlor of the trust needs the trust to hold up.
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