Preventing Abuse In Operation Of IRPT
Matrimonial courts are inherently suspicious of trusts because of the potential for a dominant party (often the settlor) to use powers contained in the trust to abuse a subordinate party. For this reason, a number of provisions in the Act are designed to protect a subordinate party being abused by a dominant party during the operation of the RPT.
AMENDMENT POWERS
Amendment powers may be used to abuse the rights of a subordinate party, and for that reason these powers are restricted as follows:
S 31 (2) provides that an amendment must be consistent with;
- the purpose of the Act set out in S 6, and
- terms of the trust deed that restrict the division and distribution of trust property
S 31 (3) provides that an amendment must not permit the sale of trust property contrary to the terms of the trust deed
S 31 (4) provides that an amendment that affirms modifies or waives a right or an obligation must meet thE same requirements as to independent legal advice and settlors consent as required on formation of the RPT.
S 30 (2) provides that NO amendments are permitted once a separation notice is given EXCEPT by application to the court.
TRUSTEES ENHANCED DUTIES AND POWERS
In addition to their normal duties, Trustees are placed under enhanced duties and given additional powers to minimise the risk of abuse:
S 70 provides for the trustee to apply to the Court to adjust the shares of the a beneficiary who is participating in the administration of the trust where that beneficiary acts to the unfair advantage of another beneficiary.
S 40 (4) prevents a trustee from delegating its power to make distributions other than to a co trustee.
S 43 provides that a trust deed must not limit the liability of a trustee where the trustee becomes aware of dishonesty or wilful misconduct.
S44 sets out specific duties of the trustee once a separation notice is received.
This ends our 4 part series.
If you are considering using a Cook Islands International Relationship Trust contact us by email at info@trusteescookislands.com for our registration package and details.
