Tammy McLeod (BA LLB) is a partner at Davenports Harbour Lawyers. Tammy leads the Davenports Harbour Trust Team and enjoys providing clients with advice and assistance on a broad range of issues involving the establishment and structuring of asset plans, interpretation of trust deeds, duties of trustees and the management and administration of trust funds. A key part of Tammy’s practice is reviewing existing asset holding structures to ensure they achieve the needs and requirements they were established to meet. She is also experienced in Property (Relationships) Act issues and believes that the provisions of the Act are an important consideration in personal asset planning. Tammy is a past president of the Auckland Women’s Lawyers’ Association.
Beth and Joe had had a trust for many years. The trust owned their family home and bach and they and their children were beneficiaries of the trust. Their children had grown and now had families of their own. It was a while since Beth and Joe had looked at the trust documentation. The lawyer who had set it up for them had retired and while they had a folder full of documents, it was many years since they had talked to anyone about the trust.
In particular, Beth and Joe wanted to make sure that their grandchildren’s education would be paid for if they died, and they were keen to make sure that the family bach was kept as long as possible for the use of their children and their families. One of Beth and Joe’s friends explained that trusts these days were becoming a specialty area and it might be worth their while to get some specialist advice, which is what Beth and Joe decided to do.
They made an appointment with a lawyer who practised only in the area of trusts and took the trust folder with them. The lawyer assured them that even though when they set the trust up they didn’t have any grandchildren, it was anticipated in the trust deed that they may have grandchildren, so their grandchildren could benefit from the trust.
However, the lawyer pointed out that they had not given instructions to the trustees of the trust as to what would happen to the trust’s assets if they died. She said that this was called a memorandum of guidance or letter of wishes and was a bit like a will for a trust. Without these wishes in place, the trustees wouldn’t know that they wanted their grandchildren’s education paid for nor that they wanted the bach kept. The lawyer also explained that given they did want to keep the bach, they should be thinking about who would be the trustees after they died and also how the trust would fund the outgoings and maintenance of the bach at that point.
Beth and Joe also discovered that they could specify their wish to their trustees that anything their children get be distributed to trusts to be established for their children, so that any funds were protected from their children’s partners. Beth and Joe thought this was a great idea, as protecting assets for their children was the main reason for setting their trust up in the first place. Beth and Joe were delighted that they had sought specialist advice and that their trust structure now had some real direction.
