Complex testamentary trust leads to legal action

Date: Mar 26, 2015

Testamentary trusts can be a useful addition to a person's estate planning - allowing them to establish trust arrangements that will provide ongoing financial support for their relatives.

However, a testamentary trust can be a complex legal entity to implement, especially when there are multiple involved parties who are all beneficiaries of the trust arrangement. In some cases, legal action can follow, as relatives disagree over the conditions imposed by the deceased's will.

In a recent case, the NSW Supreme Court was asked to unravel the conditions surrounding a testamentary trust established after the deceased passed away in 2013.

The man's will established a single primary trust, of which his wife would be the main beneficiary. Upon her passing, the trust would then be split into four separate trusts, with each providing ongoing financial support for each of the couple's four daughters.

The issue in this case was whether the appointor of the primary trust had the power to remove two of the trustees of the primary trust and appoint new trustees in their place.

The Supreme Court ruled the construction of the will didn't confer on the appointor the power to reassign the position of the trustees of the primary trust. The Supreme Court confirmed that the trustees of the primary trust remained the trustees who had been appointed under the will until such time as they chose to vacate that office.

Where a will is complex, it is important to establish whether or not there are grounds to pursue legal action. In this case for example, the original will ran to 30 pages long, and this complexity became a key factor in the legal dispute.

On the other hand, those who have been assigned a specific role under a will - such as the role of trustee or appointor of a testamentary trust - will need to be sure they understand their own legal responsibilities.

For more on the legal requirements that accompany an estate dispute, make sure to contact a wills and estates lawyer.