TalkTax

Intention in the context of trusts is more usually seen in the context of the three certainties. However, the recent decision in Ward v Ward [2009] NZSC 125 regarding an application under s. 182 of the Family Proceedings Act, may require looking at intention in the trust context in a whole new light.

Section 182, the origins of which date back to the mid-19th century, allows the Court to review the basis for an ante-nuptial or post-nuptial settlement. Where a settlement onto trust is found to be premised on the continuation of a marriage, the Court has the discretion to make orders in respect of that trust following the dissolution of the same marriage.

The practical impact of this decision is the need to be able to demonstrate the settlor’s intentions where trusts are settled in contemplation of or during marriage. While it is common to record intentions and to maintain evidence of the same in respect of land dealings, the generic language of most deeds of trust may be of limited assistance to any trustee or other party looking to defend or resist proceedings under s. 182.

Although the ability to re-visit the basis for many settlements may be limited, moving forward any party involved in settling a trust to which s.182 could apply would be wise to consider the settlor’s intentions and to ensure that these are clearly documented.