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Trusts Act 2019

Court powers and dispute resolution - Alternative dispute resolution

144: ADR process for internal matter if trust has beneficiaries who are unascertained or lack capacity

You could also call this:

"Helping unknown or vulnerable beneficiaries in a trust dispute"

Illustration for Trusts Act 2019

If you are dealing with a trust that has beneficiaries who are not yet known or who cannot make decisions for themselves, and there is a dispute about the trust, the court will appoint someone to represent those beneficiaries. You can think of beneficiaries as people who will get something from the trust. The representatives can agree to a settlement or an arbitration decision on behalf of those beneficiaries. Any settlement that the representatives agree to must be approved by the court.

When representatives are appointed for beneficiaries who are not yet known or who cannot make decisions, they must act in the best interests of those beneficiaries. The court can order that the representative's costs be paid from the trust's property. The court can also make any other orders it thinks are necessary about the representative's appointment.

This rule only applies to disputes that are internal to the trust, which means they are about the trust itself, not about something outside of it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7383087.

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"Trustees can send problems to a special solver if everyone agrees"

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145: Power of court to order ADR process for internal matter, or

"Courts can make you use a special process to solve trust problems in a fair way."

Part 7Court powers and dispute resolution
Alternative dispute resolution

144ADR process for internal matter if trust has beneficiaries who are unascertained or lack capacity

  1. If a trust has any beneficiaries who are unascertained or lack capacity, then, for a matter relating to that trust that is subject to an ADR process,—

  2. the court must appoint representatives for those beneficiaries; and
    1. those representatives may agree to an ADR settlement, or agree to be bound by an arbitration agreement and any arbitral award under that agreement, on behalf of the beneficiaries who are unascertained or lack capacity; and
      1. any ADR settlement must be approved by the court.

        1. If representatives have been appointed under subsection (1) for beneficiaries who are unascertained or lack capacity,—

        2. the representatives must act in the best interests of the beneficiaries on whose behalf they have been appointed; and
          1. the court may order that a representative’s costs be paid out of the trust property; and
            1. the court may make any order that it thinks fit regarding the terms of a representative’s appointment.

              1. This section applies only to internal matters.