We are often asked whether it is worthwhile having a trust. Whether a trust will be of use to you will depend very much on your own personal circumstances and what you want to achieve. However, a recent court decision is a good illustration of when a trust could have prevented a challenge to a will.
Edwin and Pamela Talbot (third generation farmers) owned an interest in a farm at Timaru. They had three adult children, a son Graham who had worked on the farm since he was 17, and two daughters who each had careers and a life off the farm.
For 25 years Graham worked with his parents, and he acquired a half interest in the farm. Keeping the farm in the family, and keeping it viable, was important to Edwin and Pamela.
When Edwin died in November 2014 and Pamela died 6 months later, the assets in their estates comprised:
- A half share in the farm worth approximately $4 million; and
- “Off farm” assets (a holiday home and investments) of approximately $2 million (“the balance”).
The main effect of Edwin and Pamela’s Wills was to leave their half share in the farm to Graham, and to leave the balance of their assets to be divided between their two daughters, Jillian and Rachel.
Rachel accepted the position. Jillian did not, and she challenged her parents’ Wills under the Family Protection Act 1955.
Ultimately Jillian’s claim failed, and the Court did not alter the terms of Edwin and Pamela’s Wills.
However, the costly and distressing Court battle could have been avoided if the parents’ interest in the farm was held by a Trust, as the farm would then not have formed part of their personal estates.
Having the right structures in place, as part of a flexible and workable plan for farm succession that will withstand any attacks, is vital.
If you need assistance to find the right solution for you and your family, give us a call at Gallie Miles.