SuccessionPlanning Archives

Trustee decision-making

April 28, 2026

Estate Planning, Trust Law, Trustee Duties, Wealth & Asset Planning, Wills & Succession

How much weight should settlors’ directions carry?

It is estimated that there are between 300,000 to 500,000 trusts in New Zealand, and it is often said that we have one of the highest numbers of trusts per capita in the world. Although the reasons for having a trust are not quite as compelling as they used to be, trusts remain a large part of the legal and asset planning landscape. Trusts arise in many contexts including property ownership, investments, relationship property, insolvency and estates – to name a few.

We explore some of the interplay between settlors and trustees of a trust, particularly in relation to directions given by the settlors to trustees. It is very common for settlors to provide a form of guidance to trustees as to how the trust should be administered. However, must trustees follow the settlor’s directions? Should they follow those directions? What effect, if any, do a settlor’s wishes have on the trustees’ administration of the trust?

Operation of a trust

It is useful to begin with a reminder of the core mechanics of a trust. When assets are settled on a trust, they are transferred from the ownership of the settlors to the trustees. The trustees manage those assets for the benefit of the trust beneficiaries, and in accordance with the purpose and terms of the trust.

A settlor can also act as a trustee, but trustees must exercise their powers independently and in accordance with their duties to the beneficiaries. This is often achieved by having an independent trustee. The role of an independent trustee is becoming increasingly important and a lack of separation between the settlors, trustees and beneficiaries may undermine the trust’s purpose and leave it vulnerable to challenge.

It is for this reason that a settlor may choose to give written directions to the trustees about how the trust’s assets should be managed, how various beneficiaries should be treated, how the assets should be distributed and when that distribution should happen.

These directions take various forms but are often referred to as a ‘letter of wishes’ or a ‘memorandum of guidance.’ They are typically separate from the trust deed and kept with the core documents of the trust. Settlors can update these documents over time and they are often referred to or repeated in the settlor’s will. It is common for these directions to take effect on the settlor’s death or incapacity.

Effect of settlor guidance in trustee decisions

Guidance of this sort is not legally binding on trustees, but it is still an important consideration. As discussed above, the role of a trustee is to administer the trust in the best interests of the beneficiaries. A trustee is not an agent – nor puppet – of the settlor.

Trustees must exercise their own independent judgement when making decisions about the administration of the trust. They must consider all relevant factors. A settlor’s expressed wishes are one such factor, provided those wishes are consistent with the purposes and terms of the trust.

There is some authority in case law to suggest that this guidance is a mandatory consideration for trustees,^[1] but it is clear that – as a minimum – trustees should read and understand the document. The Court of Appeal stated in the Chambers case, ‘It is necessary for trustees to read and understand a memorandum of guidance to discern the settlor’s wishes, and then with those wishes in mind make an independent assessment of the appropriate course of action, taking into account not just the memoranda, but all relevant factors.’

Independent decision-making

Trustees should take particular care when exercising powers in a way that departs from the settlor’s expressed wishes, as these decisions are more likely to be challenged by beneficiaries.

Although trustees are not ordinarily required to give reasons for their decisions, if that reason is challenged, they may be required to show that their decision was properly reached. Where a beneficiary can convince a court that there is a genuine and substantial dispute about whether a decision was reasonably open to the trustees, the court may scrutinise the decision-making process.

In those circumstances, trustees will need to show that the decision was within their powers, was made for a proper purpose and was rational, that it took into account relevant considerations and ignored irrelevant ones, and that the decision was reasonably open to the trustees in the circumstances. This list is not exhaustive but illustrates that the exercise of trustee powers can be complex.

Other options for trustees

Where trustees propose to make a decision that departs significantly from the wishes of the settlor – or involves a particularly significant or ‘momentous’ decision regarding trust assets or beneficiaries – the trustees should consider applying to the High Court for a ‘blessing order.’ This type of application takes advantage of the High Court’s supervisory role in relation to trusts and asks the court to ensure that the trustees have properly formed their view and that the proposed decision is one that is reasonably open to them. If granted, the order can provide trustees with protection from later challenge.

Difficulties can arise where the settlor’s later wishes differ from the context and purpose for which the trust was originally established. Over time, a settlor’s intentions may evolve; guidance provided years after the establishment of the trust may sit uneasily with the trust’s original objectives. In such cases, trustees may conclude that the later expression of wishes carries less weight than the underlying purposes of the trust, given the trustees’ duty to administer the trust in accordance with those purposes.

If faced with this situation it would be worth discussing with us whether there are powers to vary the trust and to add/remove beneficiaries, and whether restructuring the trust through these means may achieve a more secure outcome.

While it is common for settlors to leave written guidance for trustees, such documents are not binding but instead form part of the broader context that trustees should consider when making decisions. Trustees must ultimately exercise their own independent judgement. They should neither follow a settlor’s wishes blindly nor disregard them entirely.

Where significant decisions are required and uncertainty exists, it would be prudent to take legal advice and consider all available options including whether to seek the guidance of the High Court through an application for a blessing order.

^[1] Chambers v S R Hamilton Corporate Trustee Ltd [2017] NZCA 131.

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2025. Editor: Adrienne Olsen. E-mail: [email protected] Ph: 029 286 3650

Considering Retirement Village Living

March 2, 2026

Estate Planning, Legal Guidance, Property Law, Retirement Planning, Succession Planning

A few years on from her decision to take out a reverse equity mortgage, and having enjoyed the benefits of releasing some of the capital tied up in her home, Karen is now feeling less confident about living on her own. Many of her old friends have moved away from her neighbourhood, and she is finding that she would like more support close at hand. She has decided to investigate moving into a retirement village.

This option offers several advantages. Karen would no longer need to worry about home maintenance, security, insurance, or rates. She would have ready access to assistance should she suffer a fall or other medical event. And if she feels like company, there would be plenty of like-minded people nearby.

However, Karen has been warned that there can be significant financial implications when selling a home and buying into a retirement village. To fully understand her position, she meets with her solicitor.

Her solicitor explains that most — though not all — retirement villages operate under Occupation Right Agreements (ORAs). Under an ORA, Karen would pay a capital sum in exchange for the right to live in her chosen unit. She would not own the land or building itself, and her right to occupy the unit would be subject to certain terms and conditions.

These conditions often include payment of a regular weekly fee for as long as the unit is occupied. There is also usually a deferred management fee (sometimes called an exit fee), which is deducted from the original capital sum when Karen leaves the village — whether that is because she chooses to move elsewhere or upon her death. In addition, there will be village rules governing what residents can and cannot do within their units and the wider village.

Karen’s solicitor takes the time to carefully explain the legal and financial implications, including how the move may affect the estate she intends to leave to her family. Once Karen fully understands her options, she is in a position to decide whether a move to a retirement village is the right step for her.

Mandy Rasmussen

Death, property and prenups

February 26, 2026

Estate Planning, Family Law, Property & Asset Protection, Property & Relationship Law, Wills & Succession

The Rimmer case has changed the rules – for the meantime

Many couples now sign agreements ‘contracting out’ of the Property (Relationships) Act 1976. These contracting out agreements are commonly known as ‘prenups.’

Even though some prenups contain clauses that say couples must review the agreement every five years, or when a significant event happens (such as the birth of a child), they are almost never reviewed.

Early relationship prenups

What usually happens is that at the start of their relationship, a couple decide to buy a house together. They want to protect their respective deposits. They may have children from prior relationships to whom they want to leave their ‘share.’ They buy a house as tenants in common and sign new wills. They also sign a prenup stating:

Their shares in the house are their respective separate property
They may give each other a right to occupy their share of the home for, say, two years after their death, and
They intend leaving their separate property to their respective children.

What typically happens next is that the prenup and the wills are put into the bottom drawer and forgotten about. The couple may get married (which automatically revokes their wills), and/or they sell their first house and buy a new property that better suits their needs.

They often buy the new house as joint tenants as, after a lengthy relationship, they want to ensure their spouse inherits the home and cannot get kicked out by their late spouse’s children. When they die, their property lawyer would give them the standard advice that property that is owned jointly passes automatically by survivorship and does not form part of your estate.

Dying

When one spouse dies, leaving a mix of property in their personal and joint names, what happened next used to look like this:

Transmitting all jointly owned property (the house, the joint bank account, etc) into the sole name of the survivor
Identifying any property in the deceased’s sole name, and
If the deceased had a will, distributing in accordance with that, or If the deceased died without a will (intestate), distributing in accordance with the Administration Act.^[1]

What happens now?

This long-standing estate administration process has recently been upended by the Rimmer decision in the Court of Appeal.^[2] This decision made two statements that have changed the way lawyers think about prenups:

It is the prenup (not the will, property law or the intestacy rules) that governs what part of the relationship property forms part of the deceased spouse or partner’s estate,^[3] and
A prenup will always be given effect to (unless successfully challenged) on the death of spouse or partner.^[4]

This has now changed the process to:

Finding out whether there is a prenup, and, if there is
Dealing with all the property specified in the prenup as set out in the prenup
If there is property NOT covered by the prenup, the survivor can either:– Apply for division of the relationship property that is not covered, or
– Receive their gifts under the will if there is one, or under the intestacy rules if there is not.

How is this different?

The rules of property law ordinarily decide what falls into an estate following someone’s death. That is, if they own an asset in their sole name (such as an identifiable share in a home, or a bank account in their sole name), that will form part of their estate. However, if they own property jointly with someone else, that will pass automatically to the surviving owner(s).

In saying that ‘the division instead proceeds in accordance with the s 21 agreement,’ Rimmer appears to be suggesting that property owned solely in the name of the deceased could nevertheless be transferred to the survivor if it is defined in the prenup as relationship property (particularly if the prenup specifies how relationship property is to be divided in the event of death).

That is a huge departure from the current rules, which state that, when someone dies, their executors (if they have a will) or administrators (if they die without a will) have a strict duty to distribute their property either in terms of the will or the intestacy rules.

If their spouse or partner disagrees with those rules, they can elect to file an application in the Family Court; whatever the court then decides takes precedence over the will or intestacy rules. Rimmer seems to suggest that the executors/administrators can circumvent the rules!

What next?

Now as a result of Rimmer, the first thing we as lawyers need to do is find out if there is a prenup – even if it is 30 years old!

Instead of just working out what passed by survivorship (with everything else going to the estate), we now must establish how a potentially outdated prenup applies to the property owned by the deceased many years later.

The Court of Appeal decision in Rimmer, may not be the last word, as the Supreme Court has granted leave to appeal, so it may be that the rules change again.

For now, however, make sure if you have a prenup, that both your prenup and your will agree on what should happen to your property when you die.

If you think you have a prenup and you haven’t reviewed it in more than five years, now is the time to do so!

^[1] Section 77 of the Administration Act 1969.

^[2] Rimmer v Wilton [2025] NZCA 374.

^[3] Para [40].

^[4] Para [39].

DISCLAIMER: All the information published in Trust eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Trust eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2026. Editor: Adrienne Olsen. E-mail: [email protected] Ph: 029 286 3650

Digital assets and your estate

November 19, 2025

Digital Assets & Cybersecurity, Legal Updates & Guidance, Probate & Executor Responsibilities, Technology in Everyday Life, Trusts & Succession, Wills & Estate Planning

Why planning ahead matters

For many New Zealanders, daily life is now as much online as it is offline. From internet banking and investment platforms to email accounts, social media, cloud storage and cryptocurrencies, our ‘digital footprint’ has become an important part of who we are and what we own.

Yet most wills and succession plans still solely focus on traditional assets such as property, shares and savings. Digital assets are often overlooked, leaving families and executors struggling to access information and take control of these assets when the will-maker dies.

What are digital assets?

Generally speaking, a digital asset is any item of value that is in an electronic or virtual form (rather than physical). These include:

Financial accounts – internet banking, investment platforms, PayPal or electronic wallets
Blockchain assets, non-fungible tokens (NFTs) or cryptocurrencies
Personal content such as photos, videos or documents
Social media accounts – Facebook, Instagram, X (formerly Twitter) or TikTok accounts, and
Business platforms – domain names, websites, email lists or digital records.

Some of these assets can hold significant financial value. Others may be priceless to family members wishing to preserve a loved one’s memories.

Planning ahead is important

Digital assets are protected by passwords, encryption and restrictive service agreements. Executors cannot simply assume control of online accounts and services without legal authority. This can cause significant problems:

Executors may be locked out of key accounts
Valuable assets can be lost if no one knows how to retrieve them — especially cryptocurrencies that are unrecoverable without a private key, and
Service providers may refuse access due to privacy or contractual limits.

The courts have recognised that certain digital property, such as cryptocurrencies, can be legally owned and held on trust.^[1] However, ownership of many other online assets, such as social media accounts or cloud storage, is less certain, as users often hold only a licence, which may be non-transferable and could terminate on their death.

New Zealand’s legal grey area

New Zealand law has yet to fully catch up with the digital age. The Wills Act 2007 and Administration Act 1969 do not specifically address digital assets. Executors, therefore, must often rely on general property law, privacy regulations and the terms of individual service-providers.

Some overseas jurisdictions, including several US states, now grant executors explicit rights to access digital assets after the will-maker’s death.

Until similar reform occurs here, careful planning remains the best protection to ensure digital assets can be accessed, managed and transferred according to the will-maker’s wishes.

What to do now

Make a digital inventory – list all your online accounts, platforms and digital property
Store login credentials securely – avoid including passwords in your will, as it becomes public after probate. Instead, store passwords securely using a password manager, encrypted file or a separate memorandum of wishes held safely with us
Appoint a digital executor or include specific instructions in your will – specify who can access, manage or close your digital assets
Address cryptocurrencies directly – record how and where private keys or hardware wallets are kept. Without them, digital currency is lost forever, and
Provide guidance for sentimental items – in your memorandum of wishes state whether you want social media accounts, photos and videos deleted, memorialised or handed to your family.

We are here to help

We can help your estate planning keep up with the digital world. This includes drafting appropriate will clauses, reviewing trust arrangements and guiding executors on accessing digital accounts. Many firms include digital-asset checklists to make the process easier, saving time, money and stress later.

The bottom line

Digital assets are no longer a niche concern — they are part of everyday life and should be part of estate planning. Including them in a carefully drafted will is the simplest way to protect your online legacy and ensure that both your physical and digital affairs are properly organised.

1 Ruscoe v Cryptopia Ltd [2020] NZHC 728.

SuccessionPlanning