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disputes

Disputes involving trusts or estates (wills)

Key Takeaway

Disputes involving trusts or estates in New Zealand primarily involve the High Court, particularly for complex matters like challenging wills or trust validity. The Disputes Tribunal has limited jurisdiction and monetary thresholds, making it generally unsuitable for these types of cases. Mediation is a common alternative dispute resolution method. Legal costs can be significant, especially in High Court proceedings.

Resolving Disputes Involving Trusts or Estates in New Zealand

Disputes can arise concerning trusts, which are legal arrangements where assets are held by a trustee for the benefit of beneficiaries, or estates, which comprise a deceased person's property, money, and possessions. Resolving these disputes in New Zealand typically involves formal legal processes, with the High Court being the primary forum due to the complex nature and financial value often associated with such cases.

Jurisdiction

High Court

The High Court is the superior court of general jurisdiction in New Zealand and is the primary forum for resolving most disputes involving trusts and estates. This includes challenges to the validity of a will (a legal document outlining how a person's property should be distributed after death), interpretation of complex trust deeds (the document establishing a trust), claims under specific legislation such as the Family Protection Act 1955, and allegations of trustee misconduct [Source: Judicature Act 1908, s 16].

Disputes Tribunal

The Disputes Tribunal is a low-cost, informal forum designed to resolve minor civil disputes. Its jurisdiction is limited to claims for money payable, delivery of goods or performance of services, or claims for damages for a tort (a civil wrong resulting in injury or harm) or breach of contract [Source: Disputes Tribunals Act 1988, s 10]. There is also a monetary limit: the Tribunal can hear claims up to $30,000, or up to $50,000 if all parties agree in writing [Source: Disputes Tribunals Act 1988, s 13].

Due to these limitations, the Disputes Tribunal is generally not the appropriate forum for most trust or estate disputes. These types of disputes often involve:

  • Complex legal interpretation: Such as determining the true meaning of clauses in a will or trust deed.
  • Challenges to legal validity: For instance, alleging a will was not properly executed or the deceased lacked testamentary capacity (the legal and mental ability to make a valid will).
  • Significant financial value: Disputes commonly exceed the Tribunal's monetary threshold.
  • Orders beyond monetary compensation: For example, seeking the removal of a trustee (a person or entity holding assets in trust for the benefit of others) or executor (the person named in a will to carry out its terms), or a declaration of rights concerning property.

Therefore, while theoretically possible for a very minor, straightforward monetary claim against an executor or trustee (e.g., a small undisputed debt) to be heard, complex trust or estate matters fall outside the Tribunal's scope.

Types of Disputes and Relevant Legislation

Common disputes related to trusts and estates include:

  • Challenging the validity of a will: On grounds such as lack of testamentary capacity, undue influence, or improper execution [Source: Wills Act 2007, s 11].
  • Claims for adequate provision: The Family Protection Act 1955 allows spouses, children, grandchildren, and certain other relatives to apply to the High Court if the deceased's will (or rules of intestacy, which apply when a person dies without a valid will) does not make adequate provision for their proper maintenance and support [Source: Family Protection Act 1955, s 3].
  • Claims for testamentary promises: The Law Reform (Testamentary Promises) Act 1949 allows a person to claim against an estate if they performed services for the deceased during their lifetime in reliance on a promise that the deceased would reward them in their will, and that promise was not fulfilled [Source: Law Reform (Testamentary Promises) Act 1949, s 3].
  • Breach of trustee duties: Beneficiaries (persons for whose benefit a trust is created) can bring claims against trustees for failing to uphold their duties, such as the duty to act in the best interests of the beneficiaries or the duty to invest prudently [Source: Trusts Act 2019, ss 23-28].
  • Interpretation of wills or trust deeds: When the wording of a will or trust deed is unclear, an application may be made to the High Court for an interpretation [Source: High Court Rules 2017, Rule 4.1].

Dispute Resolution Pathways

1. Informal Negotiation and Communication

Often, the first step involves direct communication between the parties to try and resolve disagreements. This can be effective for simpler issues or where relationships are generally good.

2. Mediation

Mediation is a voluntary process where an independent, neutral third party (a mediator) helps disputing parties communicate and negotiate to reach a mutually acceptable agreement. Mediation is generally confidential, less formal, and often less expensive than court proceedings. It is frequently used for trust and estate disputes before, or as an alternative to, litigation.

3. High Court Proceedings

If other methods fail, formal proceedings in the High Court may be necessary. This involves:

  • Filing an application: A party (applicant) initiates the dispute by filing a statement of claim or an application in the High Court, outlining the legal basis for their claim and the relief sought [Source: High Court Rules 2017, Rule 5.1].
  • Evidence and discovery: Parties exchange documents relevant to the dispute (discovery) and present evidence, often through affidavits (written statements sworn under oath) [Source: High Court Rules 2017, Rule 8.1].
  • Hearings: The court may hold interim hearings for procedural matters, leading to a substantive hearing or trial where legal arguments are presented by legal representatives.
  • Judgment: The High Court will issue a judgment, which is a legally binding decision resolving the dispute.

Costs

Mediation: Costs for mediation typically involve the mediator's fees, which are often shared between the parties, and any legal fees for advice during the process. These costs are usually significantly lower than High Court litigation.

High Court Proceedings: Litigation in the High Court can be very expensive. Costs include legal fees (barristers and solicitors), court filing fees, and disbursements (e.g., expert witness fees, photocopying). The general rule is that the unsuccessful party may be ordered to pay a contribution towards the successful party's legal costs, but this rarely covers the full amount incurred [Source: High Court Rules 2017, Rule 14.1]. In some estate matters, costs may be paid out of the estate itself, depending on the nature and merit of the dispute.

What to Expect

Expect High Court proceedings to be formal, potentially lengthy, and technically complex. Parties will need to provide detailed evidence to support their claims. The process is adversarial, meaning each side presents their case to a judge who then makes a decision. The outcome can be uncertain, and the emotional toll of litigation can be significant. In contrast, mediation offers a more collaborative and flexible environment aimed at finding a practical solution.

When to Seek Independent Legal Advice

Individuals involved in or contemplating a dispute concerning a trust or estate should seek independent legal advice. Trust and estate law is complex, and early advice can help clarify rights, obligations, and the most appropriate course of action. This often involves contacting a lawyer specialising in wills, estates, and trusts. Free legal advice may be available through Community Law Centres throughout New Zealand or through specific pro bono services offered by legal firms.

Key Resources