Trusts and Estates: the role of mediation in a changing legal landscape

Written by Will Story

Trusts are woven into the fabric of New Zealand society. New Zealand has per capita one of the highest number of Trusts in the southern hemisphere.

Despite much investment in Trusts by many New Zealanders over generations past, Trusts are no longer the bullet-proof vest in terms of asset protection. Much to the distaste of traditional Trust lawyers, shots fired by the Courts over the past decade have significantly dented (and in some cases irreparably penetrated) the old faithful shield.

In addition to the ongoing natural erosion of Trust sanctity, the Trusts Act which comes into play on 30 January 2021 ups the ante for trustees who will be subject to a new and intensified level of scrutiny (particularly from beneficiaries). This is timely and, some would argue, overdue.

The legal landscape for trusts is changing. Some commentators have surmised that litigators will be rubbing their hands together in anticipation of a mounting swell of Trust litigation. I am personally not so sure. In fact, in the Trusts Act, Parliament has given the royal nod to mediation as a means of resolving Trust disputes. If utilised effectively, encouragingly this could see many Trust disputes diverted from the expensive, time consuming, relationship-damaging track that Court can sometimes (dare I say, often?) be.

Like Trusts, the legal landscape for Estates is also evolving. While blood is thicker than water, human nature and diverse family dynamics ensure that the administration of many an Estate in New Zealand will not go according to plan.

And as society evolves, the less suitable the application of black letter law becomes. Mediation, unlike the Courts, is not bound to interpretation and application of such law. Outcomes can be creative and molded to fit the parties, and participants are free to explore issues which may lack legal answers.

For example, in a recent family dispute mediated by Fair Way, the issue of who had the right to make decisions about what should happen to the digital profile of a deceased family member was in dispute.

The deceased had left behind a Will, but as is so common, the Will did not address digital media or intellectual property. The deceased had a strong presence on Facebook, Instagram and LinkedIn, as well as other accounts such as Spotify, Amazon and Audible, online banking and other online retail. One party was adamant that the ongoing existence of the profiles created “a gross misrepresentation that the deceased was still available to conduct business.”  For that party, it was particularly upsetting seeing people interacting with the deceased and receiving daily notifications about activity on the deceased’s Facebook page. The other party felt strongly that deleting all traces of the deceased’s digital presence so soon after death was insensitive and unsolicited. It quickly became clear to the mediator that the underlying dispute really arose as both parties had such different grieving processes. The mediator was able to successfully identify the common grief and work with the parties to shape what turned into a novel, but mutually satisfactory, outcome. The dispute was settled within one week of the deceased’s death, and all parties successfully healed their relationships moving forward.

Mediation is geared for constant change. The Courts are not.

There is always a time and a place for litigation, but lawyers need to be judicious about it (ironic, I know!). Court should be the last resort. There are always going to be high needs cases requiring judicial determination. But our burgeoning Courts need to be relieved of the “everyday” disputes which have become commonplace and added to the well-publicised nationwide backlog.

If you are involved in a Trust or Estate dispute, or responsible for advising clients who are, nip the conflict in the bud and give mediation a try.

Fair Way Resolution Limited has expert Trust and Estate mediators. If you or your client have an issue that could benefit from mediation, please get in touch with Will by by email at will.story@fairwayresolution.com

About the Author

Will Story is the Manager of Family Services at Fair Way Resolution Limited.

Before joining Fair Way, he was a practising Lawyer with significant experience in family law, property law and general practise (both in Hawke’s Bay and Wellington).

If you would like to get in touch with Will, please contact him by email at will.story@fairwayresolution.com