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Sally Ridge: 'My brain doesn’t compute trusts'

Socialite Sally Ridge claimed ignorance during the court fight over shares in former partner Adam Parore’s business.

The interior designer and TV personality told the court it could call her thick but she did not understand the ins and outs of a trust, a recent judgment shows.

The Auckland High Court threw out Ms Ridge and her daughter Jamie’s bid (as trustees) for half of the shares in Small Business Accounting (SBA) which is owned by the Parore Family Trust.

Earlier claims – including one over Ms Ridge and Mr Parore's former home – have been abandoned.

Ms Ridge and Mr Parore came together in 2001 and restructured trust arrangements in 2007. The family assets - including the couple’s Ponsonby property - were transferred to the Ridge Trust, while business assets and liabilities went into the Parore trust.

Ms Ridge’s lawyer, Daniel Grove, had argued that despite the legal ownership, there was a shared intention that assets of either trust were held for the benefit of both trusts equally.

In his judgment, Justice Murray Gilbert said Ms Ridge claimed she was unsure about the details of the restructure and had relied on Mr Parore. She said at trial:

“You could explain them to me and I used to say this to Adam a million times, “My brain doesn’t compute trusts,”

“I don’t get them, don’t understand them, never have and I most probably never will.”

Justice Gilbert said despite such comments Ms Ridge “impressed as an intelligent and capable woman.”

The judge concluded that while Ms Ridge may not have been interested in the legal niceties, she understood the nature and the effect of the arrangements made.

The judge added it was particularly difficult for Ms Ridge to claim there was a clear and unequivocal intention for the assets of the trust to benefit both trusts as her pleadings changed throughout the course of the trial.

Mr Parore's lawyer, Zane Kennedy, said Mr Parore was unavailable to comment. Ms Ridge's lawyer, Daniel Grove, had not responded to NBR's request for comment at press time.  

Comments and questions

I am sure that the Ridges would have an intimate knowledge of trusts if they thought that there was a financial gain to be had by that position. Ignorance of what you sign up to is like saying I did not know the gun was loaded.
As my pappy always said, "stop whinging, scrub up, and get a job"

Generation Narcissist

Sally is not alone - Mr Cunliffe also seems confused

Can someone explain the reason or trusts,or is it simply to avoid taxes and the like.

Its for asset protection - which looks like it is working pretty well from Adam at the moment.

Without the trust, after 3 years in a realtionship, the partner gets 50%.

Adam has managed to keep his business.

Somewhat dodgy, he somehow got half the house. Ridge shouldn't be suing Adam, she should be suing her lawyer, or did she not use one to review the documents she signed??

Trusts can be a convenient way to hold assets, especially for future generations. Previously there were sometimes tax advantages (eg when personal tax rates were higher than the tax rate for trusts). This is presumably why many people still think this is the case (and some lazy journos?). However, now it is in fact the opposite. Not only are tax rates on trusts higher than both company and personal tax rates, unlike personal taxes for which tax rates start much lower and only rise with income towards the same rate, trusts are taxed at the full highest rate on all of their income, right from the first dollar.

Trusts are one of the oldest legal structures known, next to contracts. Stripped down to their essence Trusts are in fact very simple and easy to understand. Tax minimisation is only a recent motivation to create a Trust.

If your family home is in a trust and you enter a rest home,what are the implications for resthome subsidies?

It depends on how the trust got the money to buy the house. If done 'right' it wont be counted in the subsidy calculation.

However, working for families now looks through trusts for its calculation and I expect other forms of government assistance to follow suit over the next 10 years.

Depends how long beforehand it was transferred to a trust, the asset disposition rules are different for rest home subsidies and they can look back quite a few years.

That will depend very much on who is the beneficiary of the trust. If you are clearly not a beneficiary (explicitly or implicitly) it shouldn't affect matters. But if there's even an implicit benefit (and the authorities are getting a lot more beady about these matters) then it could cause problems.

You should see a lawyer for proper advice on this.

Trusts should require filing of annual returns listing the owners & key financial data for the year; just like companies. Take the existing secrecy out of trusts beside any tax advantages such as Working For Families & resthome subsidies.

I suspect that the trust concept is just one of a long list of things that would crash that particular computer.