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LegalFebruary 01, 2022

Trust assets held on constructive trust for adult children of abusive father

In a ground-breaking decision, a father who physically, mentally and sexually abused his children was found to have breached his fiduciary obligations in transferring his principal assets to a trust. The father carried out the transfers shortly before death with the stated intention of defeating any claim by his adult children to his estate.

The High Court held that the father owed fiduciary obligations to his children that, in the circumstances of this case, continued into adulthood. The transfer of his assets to a trust breached that fiduciary duty he owed to his now adult children. The father’s knowledge of the abuse and breach of fiduciary duty (he had been a trustee) by the transfer of the assets was imputed to the other trustees. The Court held that the assets transferred to the trust were held on a constructive trust for the now deceased father’s estate (which is subject to a claim by those children under the Family Protection Act 1955). 

The decision represents a new and important development in fiduciary obligations and trust law.

Source: A v D and E Limited as trustees of the Z Trust [2021] NZHC 2997; (2021) 5 NZTR ¶31-022, 5 November 2021.
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