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Trusts Act 2019

Termination and variation of trusts

124: Power of court to approve termination, variation, or resettlement of trust

You could also call this:

"The court can help make changes to a trust to make sure it's fair for everyone involved."

Illustration for Trusts Act 2019

The court can approve changes to a trust on behalf of certain beneficiaries. You are one of these beneficiaries if you have an interest in the trust property and lack capacity, or if you may get an interest in the future. The court can make decisions for you if you are a future person who may get an interest in the trust.

You can ask the court to approve changes to a trust if you are a trustee or have a beneficial interest in the trust property. When you make this request, the court thinks about how the changes will affect everyone's interests in the trust property. The court also considers whether the changes will be good or bad for people with interests in the trust property.

The court tries to understand what the person who set up the trust originally wanted, if that is possible. The court cannot make changes that would reduce or remove any existing interests in the trust property. If the court approves changes to a trust, its decision is final and affects the person it was made for, without needing any further action.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7383050.

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123: Beneficiary’s right to share of trust property, or

"Getting your fair share of trust property if you're a beneficiary"

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125: Power of court to waive requirement of consent to termination, variation, or resettlement of trust, or

"The court can change or end a trust without everyone's agreement if it's a good idea."

Part 6Termination and variation of trusts

124Power of court to approve termination, variation, or resettlement of trust

  1. The court may, on behalf of any of the beneficiaries described in subsection (2) who has an interest in the property of a trust, approve the termination, variation, or resettlement of the trust.

  2. The beneficiaries are—

  3. a beneficiary who lacks capacity:
    1. a person who may acquire a beneficial interest at a future date or on the happening of a future event or on becoming a member of a certain class of persons:
      1. a future person who may acquire a beneficial interest.

        1. An application for an order of approval may be made by—

        2. the trustees or any one of them:
          1. any person with a beneficial interest in the trust property.

            1. On an application for an order of approval, the court must take into account each of the following factors:

            2. the nature of any person’s interest in the trust property and the effect of the proposed order on that interest:
              1. the benefit or detriment that may result to any person with an interest in the trust property if the court makes or refuses to make the proposed order:
                1. the intentions of the settlor of the trust in settling the trust, if it is practicable to ascertain those intentions.

                  1. The court must not make an order of approval if its effect would be to reduce or remove any vested interest in the trust property.

                  2. An order of approval binds the person on whose behalf it is made and takes effect without any further step.