Lost trust deed? NSW Supreme Court tells you what to do14 July 2020 Authored by: Steven Jell, Clinton Jackson | Topics: Banking and financial services, Trusts, Family business
A recent case in the Supreme Court of New South Wales has reinforced the importance of knowing where your original trust deeds are located.
A discretionary trust was established in 1972. Apart from the initial settlement sum, the trust had no other assets until 2007, when a portfolio of property and businesses were transferred to the trustees of the trust.
The portfolio generated substantial income, which was held in bank accounts and paid to the beneficiaries of the trust in accordance with the copy of the original trust deed.
In 2009, a bank requested the original trust deed be provided so that it could satisfy its ‘knowing your client’ obligations.
When the original trust deed could not be located, the bank froze the trust’s bank account, even though a signed photocopy of the original deed was able to be provided.
An application was made to the court requesting an order that the photocopy the trustees had was a true copy of the original deed.
The court did not grant the specific orders sought but did give direction to the trustees that it was appropriate for them to treat the photocopy of the deed they had as a true copy of the original deed and to administer the trust according to that copy.
Lost trust deeds are a common problem a lot of clients have when dealing with banks and investment platforms. Normally, the requirements of these institutions can be dealt with without the need to go to court by preparing a confirmation deed where the key parties confirm a signed copy confirms the terms of the trust.
However, there are some situations where it is critical to have certainty as to the true terms of a trust, such as a dispute with a disgruntled beneficiary or ATO litigation. In these cases, it may be necessary (or even essential to protect the trustees from adverse costs) to take further steps, such as applying to the court (the Supreme Court in each state has powers to provide assistance).
While the issues with misplacing a trust deed are not new, this case is a timely reminder of the importance of knowing where your original deeds are located and the need to take steps to address any lost deeds or other irregularities in the history of the deeds.
The time, cost, stress and complications of an application like this could have been easily avoided by some simple housekeeping.
If you have any questions regarding the options to deal with a missing trust deed or if would like us to review your trust deed history (including variations or changes to trustees) to ensure its effectiveness, please contact one of our team.