Strategically planning the preservation and growth of your assets for future generations is paramount. In doing so, it’s crucial to ensure that your assets are managed, utilized, or sold in alignment with your intentions.

A recent Court of Appeal case, McLaughlin v McLaughlin, underscores the importance for settlors (trust creators) to communicate their directives or wishes to their professional advisors, including lawyers and trustees. It’s essential to record the intention and purpose of the trust at its inception to provide trustees with the necessary guidance for administering the trust accordingly.

In the McLaughlin case, the settlors established a discretionary family trust and appointed their son, John, as a trustee. They expressed their desire for the trust’s land to be subdivided, with John playing a pivotal role in the process. Despite ensuing disputes regarding the management of the subdivision, the Court upheld the trustees’ actions, citing implicit authorization from the settlors.

The Court emphasized the significance of settlors conveying their intentions clearly at the trust’s creation, preferably in writing. This ensures that trustees understand how the assets should be managed, used, and for what purpose. The implicit authorization exception permits trustees to act in accordance with the settlors’ intentions, even if it involves self-benefit, provided the intention is evident from the outset.

The McLaughlin case underscores the importance of settlors articulating their wishes upfront and documenting them. This proactive approach minimizes the risk of misunderstandings and conflicts among family members down the line.

For comprehensive guidance on preserving your assets for yourself, your family, and future generations while mitigating inter-family conflicts, consult your lawyer for personalized advice.