Krstic v State Trustees Ltd  VSC 344.
In its decision published on 9 November 2012, the Victorian Supreme Court was asked to determine whether two sons of the deceased could receive their inheritance immediately rather than waiting to attain the ages specified in the deceased’s will.
The terms of the deceased’s will gave specific bequests and then divided the estate equally between the deceased’s two sons, with the sons receiving their share upon them respectively turning 40 and 36 years old. The will also stated that if the sons had not already attained the specified ages, or if they were to pass away, their share would go to their children who survived the deceased. At the date of the hearing the deceased had no grandchildren and his sons were only aged 24 and 20, therefore, the legacy did not immediately vest in them. To avoid having to wait 16 years before they could access their inheritance the sons made an application to the Court to interpret the terms of the will.
The question for the Court was whether the residuary estate vested in the sons absolutely. Considering the construction of the will, the Court applied the rule in Saunders v Vautier; that is, adult beneficiaries of a trust who have an absolute, vested and indefeasible interest may require that they receive their entitlement at any time.
In this case as the deceased only had the two sons, had no grandchildren, and there were no other people who could possibly benefit from the deceased’s estate, the Court held that the sons did have an absolute, vested and indefeasible interest in the estate and that by applying the rule in Saunders v Vautier they were entitled to end the trusts and demand the transfer of their interests.
Comment - The sons in this case were fortunate to receive their inheritance earlier than the deceased had intended under his will. Had there been grandchildren of the deceased or other beneficiaries with an interest, the sons would not have had an absolute, vested interest and the trust would have had to continue until the vesting date.
Applying the principle in Saunders v Vautier may involve denying the willmaker’s wishes, however it is based on the reasoning that if a beneficiary is absolutely entitled to the proceeds of a trust then bringing an end to the trust should not be withheld if the beneficiaries will receive the proceeds in any event. It is important to take this principle into consideration both when drafting terms of trusts, and advising beneficiaries.