Trusts and guarantees.

Dawn and James were a successful couple in their early 60s.

They had done well for themselves, accumulating a small portfolio of commercial properties as well of course, as their own home and also a small bach down at Ohakune – they were keen skiers.

At the insistence of their lawyer, they had established a trust some years ago. It was a well-maintained trust. James and Dawn were fastidious at getting things right. They made sure that they had an independent trustee and their trust administration was immaculate. They had read in the papers about the Courts looking at such things if a trust was ever challenged.

Not that Dawn and James ever expected their trust to be challenged. They had two grown-up daughters and three small grandchildren. They liked their sons-in-law and could never imagine the trust being challenged. They did acknowledge though that it was hard for young families to get ahead with the price of the property being what it was and they were keen to help their daughters if they could.

Their opportunity arose when their youngest daughter, Marie, and her husband, John, approached them to see if Dawn and James would be able to guarantee their borrowings on the new house that they were purchasing. Marie and John had a great income between the two of them, but they hadn’t been able to save a very big deposit due to the amount of rent they were paying. Dawn and James were delighted to help out and of course, said yes.