The High Court has found that a father breached his fiduciary duties to his three adult children when he placed his assets in a Trust he created during his lifetime.

The effect was to leave little in his Estate for the children on his death. None of the children were beneficiaries in the Trust.

The father had emotionally and physically abused his three children throughout their childhood, causing them long term harm.

On his death, the children brought a claim against the trustees of the Trust claiming their father owed a fiduciary duty to them such that they were entitled to rely on their father not to act against their interests, and that he had breached that duty by transferring his assets to a Trust.

The children sought orders effectively reversing the father’s gifts of his assets to the Trust.

One of the issues the Court considered was whether a finding of a fiduciary duty would impinge on an owner’s property rights and their right to deal with their property freely during their lifetime.

The Court decided that the father did owe a fiduciary duty to his children to refrain from abusing them, and that this duty was breached when he transferred his assets to the Trust in order to prevent the assets from being included in his estate where the children could otherwise bring a claim against them.

The Court also found that the Trustees were liable for knowing the purpose and effect of receipt of the assets as the father’s knowledge was imputed on the Trust.

The Court ordered that the Trust property be held on a constructive trust for the father’s estate, to be divided at a later date.

In this case, the father’s attempt to deprive his adult children of a share in his property through a Trust failed. While this case involved an extreme set of facts, it illustrates the potential risks with estate planning by the means of a Trust, and the Court’s willingness to intervene where necessary.

Estate planning involves significant complexity so it is wise to seek help from a professional with experience in the estate planning and trusts area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are. At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Jon Beck and Matthew Binnie