When Family, Trusts, and Wills Collide: What a Recent $2M Property Dispute Teaches Us
A recent New Zealand High Court decision highlights an issue that often surprises people involved in family trusts: a memorandum of wishes is not legally binding.
In this case, a man attempted to urgently prevent the sale of a $2 million home he had been living in. The property was owned by a family trust established by his now-deceased parent, and he believed he held a life interest allowing him to remain in the home.
However, just days before the scheduled auction, the High Court dismissed his application, allowing the trustees to proceed with the sale.
What Did the Parent Actually Intend?
the parent had written a memorandum of wishes saying:
- The property should remain in the trust, and
- The man could live there for the rest of his life.
But here’s the catch: memoranda of wishes aren’t legally binding. Trustees must consider them, but they don’t have to follow them if other trust obligations point elsewhere.
So why couldn’t he stop the sale?
Years before the parent’s death, the trustees removed him as a beneficiary of the trust. Although he believed he had a “life interest,” the Court found no legal basis for that belief. Once the parent passed away, the trustees decided to sell the home and wind up the trust - something firmly within their powers.
What did the Court say?
The High Court dismissed the man’s urgent application, confirming the trustees had acted lawfully and responsibly.
This case reinforces that:
- A trust owns the property - not the people living in it
- Changing beneficiaries has long‑lasting consequences
- Trustee decisions must prioritise the trust’s purpose
- Memoranda of wishes aren’t the same as legally enforceable instructions
How can Godfreys Law can help?
At Godfreys Law, we regularly help clients work through similar issues, and this case is a powerful reminder of why clarity and good advice matter.
The good news? These disputes are often preventable. We work with clients to ensure:
- Trusts reflect real, enforceable intentions
- Trustees understand their decision‑making responsibilities
- Trust documents stay up‑to‑date as families evolve
- Issues are addressed early before they become disputes
- Litigation support is available when necessary
Key Takeaways
Even families with the best intentions can end up in conflict when trusts aren’t clear or maintained. With the right planning and guidance, you can protect your assets and your relationships.
If you’d like us to review your trust or estate planning documents, the team at Godfreys Law is here to help.
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