Are you considering setting up a Deed of Distribution for your family trust?
Get the right advice to ensure your wishes are adhered to – contact expert NZ Family Trust Lawyer, Peter Smith today.
7 August, 2014 | Peter Smith
For a discretionary family trust the trust will be administered by the trustees who have complete discretion as to how capital and income is distributed among beneficiaries (within the powers set out in the Trust Deed). Or if you have a Memorandum of Wishes, then the trustees will be guided by that, although it is not legally binding.
Terminal illness – A Deed of Distribution gives the settlor of a trust certainty as to distribution and a peace of mind of to whom and how, trust assets are to be distributed on the death of the settlor.
A Deed of Distribution can only be written by the settlor and the trustees and must be done with the help of your solicitor.
Yes — provided that it is an irrevocable Deed of Distribution and a Deed of Distribution is permitted by the trust deed. A Deed of Distribution is binding on the trustees and even if the circumstances of the beneficiaries named in the trust deed may have subsequently changed.So you will need to be quite certain as to the distribution before entering into a Deed of Distribution.
A Settlor and the Trustees can only create a Deed of Distribution if the Trust Deed specifically allows for a Deed of Distribution.When preparing a Deed of Distribution the Trustees need to record that they have considered the interests of the Trust’s beneficiaries. And that in having done so, the Trustees have decided to exercise their power under the Trust Deed to distribute the Trust Assets.
Because a Deed of Distribution is normally only used in circumstances where the Settlor has a terminal illness, the existence of the Deed of Distribution and its contents are normally only disclosed to the Trust’s beneficiaries on the death of the Settlor.
Subscribe to our newsletter to keep up to date with current News, Events and Legislation.