Distributing Personal vs Trust Assets.

Kate and Chris’ Mum had just died suddenly. Their Dad had sadly passed away only two years earlier, also quite prematurely, of cancer. Kate and Chris knew that their parents had a trust that held their holiday home, as well as the family home and some investments in it, however their Mum had been in the process of winding it up after their Dad died.

They knew that their Mum had sold the holiday home in the Marlborough Sounds not long after their Dad died, as she wasn’t really going down there that often without him, but aside from that, they were unclear as to where things were at.

While Kate and Chris weren’t in a rush to sort things out, they didn’t want to hold onto the family home for too long. Neither was interested in living there and it would be a liability due to the amount of rates and insurance that needed to be paid. Kate and Chris went to see their parents’ lawyer to find out the current situation.

The lawyer explained that while their mother had been in the process of winding up the trust, it wasn’t completed. The sale proceeds of the holiday home had gone into the trust. Some of the funds had been distributed to their Mum and she had put them in a term deposit, but there was still $200,000 sitting in the trust’s bank account. The family home had been transferred out of the names of the trustees of the family trust, into their Mum’s name. That had been part of the process of winding the trust up.

Kate and Chris were left a little confused about what they could and couldn’t do. The lawyer explained that they would need to apply for probate for their mother’s will as she had more than $15,000 in assets in her personal name. They would not be able to deal with any of the assets in their mother’s personal name without the grant of probate. Chris and Kate were the executors of their mother’s estate but really didn’t know what that meant. The lawyer explained that it meant that Kate and Chris would be the ones responsible for making sure the wishes in their mother’s will were carried out. They would be the ones who had to sign the documents for probate to be granted.

The lawyer explained that there were delays on the granting of probate at the moment and it was unlikely that it would be granted for at least three to four months. This meant the family home that had been moved out of the trust into their mother’s name could not be listed for sale until probate was granted.

However, the assets still in the trust could be dealt with straight away. The lawyer continued to be a trustee of the trust and Kate had also been appointed as a trustee of the trust under her mother’s will. This meant that the cash left over from the sale of the holiday home could be distributed and that they didn’t need to wait for probate for this. Likewise, the investments were also still in the trust and the trustees did not have to wait for probate to be granted before those assets could be dealt with.

This was a huge relief for Kate and Chris. While it would have been nice to be able to sell their Mum’s house quickly, it was good to be able to deal with the assets in the trust straight away. They could now see that even though there had no longer been real benefit for their Mum to retain the trust during her lifetime (given that the family business had been sold many years ago) there were advantages on her death as Kate and Chris could much more readily and easily deal with the trust assets.

The rules around how you can deal with property when a loved one dies are complex and it is imperative to get specialist legal advice.