The Trust may be broken, but the benefits are not lost!

Stories of feuding trustees, beneficiaries and appointors are all too common and sadly, may prevent beneficiaries from receiving the benefit of the Trust. Although such a loss would understandably be the cause of much anxiety for beneficiaries, the good news is that this need not be the case. Helpfully, the decision in Re Bowmil Nominees Pty Ltd [2004] NSWSC 161 (“Bowmil Nominees”) offers beneficiaries a clear path to ensure that the benefits of a Trust can be received even in circumstances where there is conflict.

In the case of Bowmil Nominees, the potential beneficiaries of the Trust had to overcome a non-cooperative party, the Principal Employer, to amend the Trust Deed and obtain their entitlements. Read on to find out more…

Background to the Case

Bowmil Nominees Pty Ltd was the corporate Trustee of the Williamson Superannuation Fund. The Williamson Superannuation Fund operated for the sole benefit of Mr Gregory Bede Williamson.
Mr Williamson died on 25 September 2005 and was survived by a de-facto wife, an ex-wife and two daughters. At the time of Mr Williamson’s death, there were funds remaining in the Williamson Superannuation Fund, but, for taxation purposes, some of Mr Williamson’s survivors wished to take their benefit by way of pension rather than by lump sum as permitted by the Trust Deed.

The Issue

While the distribution of the funds was settled between Mr Williamson’s survivors, the beneficiaries could not obtain the benefit of the funds in the way that they wished until the Trust Deed was amended to allow for a pension to be taken.  The Trust Deed which established the Williamson Superannuation Fund could only be amended with the approval of the Principal Employer. For reasons unknown to the beneficiaries, The Principal Employer refused to consent or have anything further to do with the Williamson Superannuation Fund. Therefore, the funds in the Trust were essentially “stuck” in the Williamson Superannuation Fund.

Overcoming the breakdown of relationship

In order to overcome the issues caused by the Principal Employer’s unwillingness to consent to the amendment, an application was made to the Supreme Court of NSW to amend the Trust Deed.

The Court determined that the Mr Williamson’s family could enter into a Deed of Amendment because the beneficiaries had capacity and were of one mind in requesting the amendment. Happily, for the Williamson family, the Deed of Amendment allowed them to alter the Trust Deed so that they could lawfully receive a pension from the Williamson Superannuation Fund.

How does this case help you?

The case of Re Bowmil Nominees sets out the process that can be implemented by beneficiaries to overcome issues that result from conflicts between the members of the Trust. Beneficiaries who have capacity and are of one mind can overcome conflicts with trustees, appointors and principal employers controlling the Trust by implementing a Deed of Amendment. If you are experiencing a similar challenge, contact Streeterlaw on 02 8197 0105 and speak to one your trusted Solicitors to explore your options and discover an avenue to help you resolve your dispute.

Written by Jamal Bakalian

After studying a double degree in Law and International & Global Studies at Sydney University, Jamal completed her GDLP at the College of Law. She is currently undertaking her Masters of Law (majoring in Commercial Litigation). Jamal has been practicing Law for 5 years. With a passion for resolving disputes, Jamal is a valuable member of the Commercial Litigation team at Streeterlaw.

Call us on 02 8197 0105 to book an appointment with Jamal Bakalian!