Lost Trust Deeds
Have you lost a trust deed?
The importance of an original trust deed cannot be understated. Not only does it formally document the legal relationship between various parties, including the appointor, trustee and the trust’s beneficiaries, but often it is the only acceptable documentary evidence certain organisations will take to demonstrate the existence of the trust relationship.
Common examples of where the original trust deed is required are where financial institutions, such as a bank, are setting up bank accounts or where stamping is required by the Victorian State Revenue Office to evidence the existence of a party to a real property transaction.
Unfortunately, there is no way to definitively restore a lost/destroyed trust deed, as the original is regarded in trust law as the entire basis on which the trust relationship is founded. Therefore, we recommend that to avoid the difficulties that can be encountered in dealing with lost trust deeds, multiple copies of the original stamped trust deed be maintained with all parties to the trust relationship and all parties having an interest in the trust estate.
If you are faced with a situation where you absolutely cannot locate the original deed and have exhausted all options for doing so, there are a few options available which may go some way to overcome the issues faced by the lost deed.
- Replacement or confirmatory trust deed (also called a Deed of Adoption): one option is to prepare a replacement or confirmatory trust deed. This could be prepared on the basis of the following:
- drafts of the trust deed kept on the files of the solicitor who prepared it are available
- the precedent trust deed that was in use by the solicitor at the time the trust deed was settled is available
- subsequent deeds relating to the trust (e.g. that vary the terms of the trust or appoint a new trustee) make references to certain details that confirm its existence and identify the parties to the trust deed
If none of this is available, a Deed of Adoption could adopt the standard terms and conditions of another law firm’s trust deed. However, it is essential that a determination is first made of whether standard terms and conditions are consistent with the terms and conditions of the original trust deed that has been lost.
There is a risk, however, that the creation of a replacement or confirmatory trust deed may constitute a new declaration of trust for stamp duty purposes and even crystalise a capital gains tax liability.
It might also be agreed that such a deed may constitute a resettlement of trust, with similar stamp duty and capital gains tax consequences.
- Statutory declaration: another solution may be to have a person connected with the trust (who has preferably been connected with it since the time it was settled) make a statutory declaration reaffirming the terms and existence of the trust.
The person would ideally be either the settlor, the guardian or the appointor of the trust (but not the trustee of the trust) and should be a person who is familiar with the trust deed.
The history of the trust should be detailed in the statutory declaration (to the fullest possible extent), with all subsequent deeds relating to the trust (that can be located) and any precedent trust deed or drafts of the trust deed provided as an attachment to the statutory declaration.
For stamp duty purposes, a statutory declaration should not constitute an instrument that is dutiable as a declaration of trust. Furthermore, where a statutory declaration is declared by a person connected with the trust (other than the trustee), there should not be a resettlement of trust as presumably only the trustee would have the power to vary the terms of the trust deed so as to create resettlement of trust.
- Court order: The Trustee Act of each state and territory contains provisions that allow trustees to apply to the local Supreme Court to authorise dealings with trust property or to vary the terms of the trust so as to give rise to an order that would bind all the relevant parties to the trust in a particular manner. Such an order may then take the place of the lost trust deed.
The difficulty with that course of action is that the applicant needs to satisfy the required terms and conditions before that sort of relief is available and before the court will exercise its power to come to the assistance of the party making the application. In addition (and apart from the uncertainty of such an application), the applicant would have to bear the legal costs of the proceedings which could be considerable.
To alleviate any adverse legal or tax implications which may arise following any corrective action concerning a lost trust deed, it is important that you consult a solicitor to assist and advise you of the most appropriate course of action regarding your individual circumstances.
We’re here to help.
Ann-Maree Ventura Special Counsel
Level 3, 1 Palmerston Crescent
South Melbourne, VIC 3205, Australia