This week’s question comes from long-time APIA member Hari K and the answer is kindly provided by Kristine King of DK Law.
The answer is intended to be for general information only and not legal advice.
If the rental properties are held by a trust with the parents being trustees, what is the best way to ensure that all the children get equal shares of the portfolio after the parents pass away? Will the trust automatically distribute upon the death of the parents or do the parents have to provide for the division in their wills?
A will only deals with the assets you own personally on your death and does not dictate how trust assets should be handled.
The trust should have its own set of instructions, this can be in the trust deed itself and/or in a separate document called a memorandum of wishes or
memorandum of guidance.
Please be aware that pursuant to section 19 of the Trust Act 2019, if there are no instructions for division or set objectives for the trust that would
guide division, on the trust expiry the trustees must distribute to all surviving beneficiaries in equal portions. If you have beneficiaries in your
trust in addition to your kids this could mean they are also benefitted on the expiry of the trust, despite you only wanting to benefit your own children.
Best practice is to review your trust documents including your memorandum of wishes or memorandum of guidance annually to ensure your instructions for
division are current and provide properly for the people you want to benefit from your trust.