TALKING TRUSTS: Maggie and Rob
By Tammy McLeod
Maggie and Rob had set their trust up many years ago. It owned their family home at the time and shares in their business. The business had been sold many years ago and a few years ago the trust sold their home and bought an apartment in Takapuna for Maggie and Rob to live in. Maggie and Rob hadn’t had any children. The beneficiaries of the trust were their nieces and nephews. They were both trustees together with their lawyer. The trust now owned the apartment and an investment portfolio which provided income for them to live on.
Maggie and Rob were both in their early seventies and in very good health. However, Maggie was beginning to notice that Rob was getting a bit forgetful. She put it down to old age, but became quite worried one night when Rob didn’t come home from drinks at the golf club. She called and called his mobile phone and eventually he answered – when he was driving home, he had forgotten that they had moved to the apartment and he was sitting in his car outside their old house, feeling very embarrassed after knocking on the door after his garage remote didn’t work.
Maggie took Rob to see a specialist who confirmed that Rob had the early signs of dementia. However, the particular type meant that things might progress rapidly. Maggie was pleased that she and Rob had put in place enduring powers of attorney when they moved to the apartment, as it meant that she would still be able to handle their affairs. However, she didn’t realise that the powers of attorney had nothing to do with the trust.
As Rob’s condition rapidly deteriorated, Maggie made the decision to sell the apartment and move into a retirement village. The house sold quickly. However, when it came to signing the documentation for the sale, when Rob couldn’t sign, Maggie was advised that there was a problem, as Rob was still a trustee of the trust. Enduring powers of attorney cannot be used to sign documents on behalf of an incapacitated trustee, and the trust deed did not hold any mechanism to allow Rob to be removed as a trustee. Maggie had to make an application to the Court to have Rob removed as a trustee before the house could be sold.
As the population ages, incapacitated trustees are becoming more common – it is vital to check your trust deed to ensure it holds the right mechanisms to cope with the incapacity of a settlor or a trustee.