Incapacitated Trustees and Vesting Orders
In New Zealand a lot of properties are owned by a family trust.
A family trust is controlled and operated by the trustees. There is a risk that a trust may be
handicapped by a trustee who no longer has mental capacity and is incompetent to act. The incapacitated trustee must then be either removed or replaced.
Once the above step has been taken the second step is to transfer the trust assets into the names of
the continuing and to any new trustees. It is the latter step that can be difficult.
This can be illustrated by way of an example:
Property A is owned by Trust B.
C, D, E are the trustees of Trust B. The trustees are registered on the title of Property A.
E can no longer be a trustee because he lacks mental capacity. E will need to be replaced or removed
as a trustee.
Once E has been either replaced or removed he will need to also be removed from the title, so that
the trust asset is in the names of the continuing and new trustees.
The simple solution one might think is for an Enduring Power of Attorney (EPA) to sign the A&I form
in order to correct the title.
However, Land Information New Zealand (LINZ) takes a different view on this point and does not
believe that using an EPA is appropriate for this.
So now what?
In order to transfer the trust asset into the names of the continuing and new trustees, an application
to the High Court for a vesting order is required.
The vesting order confirms that Trust B’s Property A is now vested in trustees C, D and E.
Once this is obtained the new and current trustees can then sign the necessary A&I forms.
Nilson Geiger from our DG Law team has successfully filed and obtained vesting orders in the High
Court on many occasions.
You can contact Nilson in the following ways, Mobile, DDI, Email with regards to vesting orders.