Executors and trustees can have broad powers when administering an estate or trust, but that doesn't mean their decisions are beyond challenge.

A recent Court of Appeal decision, Perpetual Trust Ltd v Cooke [2026] NZCA 349, provides useful guidance about when a court may intervene in a decision made by an executor or trustee.



The case highlights an important point: when exercising their powers, trustees need to properly consider relevant factors, including the intentions of the person who made the Will and the purpose of any trust created by it.

When can a trustee's decision be challenged?

A court won't simply replace a trustee's decision with the decision it would have made itself.

Instead, the court will consider whether the trustee properly exercised its powers and took all relevant factors into account when making the decision.

In Perpetual Trust Ltd v Cooke, the Court of Appeal found that important factors had not been adequately considered. This was enough to justify the Court intervening, despite the trustee having broad discretionary powers.

What happened in Perpetual Trust Ltd v Cooke?

The dispute arose following the death of a woman whose estate included two properties.

Under her Will, her son was given a life interest in one of those properties.

In practical terms, this was intended to allow him to live in the property during his lifetime, while preserving the property's capital for the next generation of beneficiaries.

Disputes later arose over the administration of the estate and an independent professional executor and trustee was appointed.

The trustee subsequently concluded that the son had breached the conditions of his life interest. It:

• evicted him from the property
• decided to sell the property.

The son challenged those decisions.

This created both an estate administration dispute and a trust dispute over the way the executor and trustee had exercised its discretion.

Why did the Court of Appeal intervene?

The Court of Appeal found that the executor and trustee had failed to adequately consider three important matters.

1. The Will-maker's intentions

The deceased had intended for her son to have a home for his lifetime.

That intention remained relevant when the executor and trustee was deciding how to exercise its powers.

2. The purpose of the testamentary trust

The trustee also needed to properly consider the purpose of the trust created by the Will.

3. Whether there were reasonable alternatives

The Court found that the trustee had not adequately considered whether there were reasonable alternatives to evicting the son and selling the property.

Together, these omissions were enough for the Court to intervene.

Does this mean beneficiaries can challenge any trustee decision they disagree with?

No.

The decision doesn't mean that a beneficiary can ask the Court to reconsider a trustee's decision simply because they don't agree with it.

The Court of Appeal confirmed that a court will not simply substitute its own view for that of a trustee.

The issue is whether the trustee has properly exercised its powers, including whether it considered the relevant factors when reaching its decision.

Why does the Will-maker's intention matter?

One of the important messages from Perpetual Trust Ltd v Cooke is that the intentions of the person who made the Will can remain highly relevant when executors and trustees exercise discretionary powers.

This can be particularly important when a Will establishes arrangements intended to benefit someone over a long period, such as a life interest or testamentary trust.

The trustee may have broad discretion, but that discretion still needs to be exercised in the context of the purpose of the arrangement.

What is a life interest?

A life interest can give someone the right to use or benefit from an asset during their lifetime without giving them ultimate ownership of the asset.

In this case, the son had a life interest allowing him to live in the property during his lifetime, while the capital was preserved for the next generation of beneficiaries.

That distinction was important because the purpose behind the arrangement needed to be considered when decisions were made about the property.

Who could this decision be relevant to?

The Court of Appeal's decision may be particularly relevant where a dispute involves:

• a life interest under a Will
• a testamentary trust
• a right to occupy estate property
• a decision made by an executor or trustee
• a beneficiary challenging the administration of an estate
• the removal or replacement of a trustee
• an alleged breach of trust.

These disputes can involve competing interests between beneficiaries, trustees and executors, as well as questions about what the person who established the arrangements originally intended.

What should you do if you disagree with an executor or trustee?

If you're concerned about a decision made during the administration of an estate or trust, obtaining legal advice early can help you understand both the decision and your options.

Similarly, executors and trustees facing a difficult decision may benefit from advice about their obligations and the factors they need to consider before exercising their powers.

Early advice may help protect your position and avoid a dispute developing into costly litigation.



Frequently asked questions

Estate and trust dispute advice

Smith and Partners regularly advises clients on complex estate and trust disputes, including:

• challenges to trustee and executor decisions
• life interest disputes
• testamentary trust disputes
• beneficiary claims
• trustee and executor removal applications
• estate administration disputes
• Family Protection Act, incapacity, undue influence and related estate claims
• trust litigation under the Trusts Act 2019.

Whether you're an executor, trustee, beneficiary or family member affected by the administration of an estate or trust, obtaining advice early can help you understand and protect your position.

Talk to Carolyn Ranson

Carolyn specialises in estate disputes, trust disputes, estate litigation, Family Protection Act claims, incapacity and undue influence claims, testamentary promises claims, and complex beneficiary and trustee disputes.

She regularly advises executors, trustees and beneficiaries on high-value and contentious estates and has contributed to law reform discussions relating to succession and retirement village law.

If you're affected by a trust or the administration of an estate, contact Carolyn Ranson's Personal Assistant, Suzanne Sumner, on 09 837 6840 or suzanne.sumner@smithpartners.co.nz to become a client of the firm and arrange an appointment.