Legal Project Management Plan & Checklist
NZ trustees joined as respondents to a PRA s 44C trust asset claim must get independent legal advice and defend the trust estate.
What must trustees do when joined as respondents in a PRA s 44C claim?: Trustees must immediately obtain independent legal advice separate from the settlor-partner's lawyers. Trustees have a fiduciary duty to defend the trust estate on behalf of all beneficiaries. Failure to actively engage in the proceedings can result in a default compensation order being made against the trust estate. Trustees should file a notice of defence, obtain independent valuation evidence, and consider whether the Clayton v Clayton [2016] NZSC 29 effective control test actually applies on the facts.
Can trustees prevent a s 44C compensation order by arguing the trust assets are not relationship property?: Yes. The most effective defence is demonstrating that the trust is genuinely independent - the settlor-partner does not hold any power of resettlement or other mechanism giving effective practical control over trust assets. Where the trust was settled from separate property (pre-relationship assets), this should also be documented and pleaded as a complete or partial defence to the compensation claim.
Jurisdiction: Family Court of New Zealand or High Court of New Zealand, depending on where the applicant has filed. Trustees are joined as respondents to the existing proceedings and appear before the same court.
The Process at a Glance: Upon receiving the application and supporting affidavits, trustees must immediately engage independent solicitors with no conflict with the settlor-partner. The trust deed and financial accounts are reviewed to assess the Clayton effective control test. An independent trustee affidavit is prepared asserting the trust's genuine independence. If the trust assets are at risk of dissipation orders, trustees may apply for interlocutory directions. Expert accounting or valuation evidence is obtained to contest quantum. Counsel attends the judicial settlement conference and, if unresolved, the substantive hearing.
Key Legislation and Case Law: Property (Relationships) Act 1976 - s 44C (compensation from trust estate); s 44 (set-aside of disposition). Trusts Act 2019 - trustee duties and obligations. [Clayton v Clayton [2016] NZSC 29](https://www.courtsofnz.govt.nz/) - leading test for effective control of trust assets. [Ward v Ward [2009] NZCA 139](https://www.courtsofnz.govt.nz/) - compensation methodology and trust independence analysis.
* Disclaimer: We're nobody's lawyer, because we aren't lawyers. You are, so you know better than to take legal advice from an app. We also aren't accountants or dog trainers - just digital spirit guides taking zero liability for any of this. This site exists to gather the collective knowledge of practitioners like you. Verify everything and submit your feedback on the Relationship Property Claim Against Trust Assets - s 44C Applicant - Trustee Respondent - Defending Trust Assets Against Division matter plan to improve the playbook. THIS IS NOT LEGAL ADVICE, it's a request for input.
This legal matter plan provides a structured workflow for Family Law cases, outlining the standard Litigation process. Utilize these tracking templates to manage your legal cases efficiently.
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