It is not unusual for original documents to go missing. Most of the time, that’s not such a big deal, but when your original trust deed goes missing, it can often lead to hitting the panic button!
For most purposes, a copy of an original legal document is enough. Both Federal and State laws provide that a copy, even an electronic copy, is enough to enforce the terms of an agreement in Court. However, when it comes to trust deeds, there may be parties who either want to see the original, or be provided with a ‘certified copy’ of the original. For example, your bank…
Most people think their accountant or lawyer has the original deed (or an original copy, if more than one original was signed!). However, if you haven’t seen the original for a while (maybe decades), tracking it down can be difficult – and sometimes just impossible.
Things get even trickier if you can’t find ANY version of the trust deed. No original, and no copy. You know there is a trust in existence, but just no ‘document’ to evidence the fact.
If you just can’t find your trust deed, it’s time to see your lawyer (i.e. us).
What’s so important about the trust deed?
Your trust deed is the primary document that evidences the fact that your trust exists. It records the terms of the ‘trust relationship’. It sets out the specific rights, powers and obligations of all the parties concerned, i.e. the ‘trustee’, the ‘beneficiaries’, the ‘appointor’, and the original ‘trust property’. Without knowing the terms of the trust, the trustee will be unable to properly administer the trust.
Unfortunately, the solution is not as simple as signing a ‘new trust deed’, since this would likely establish a separate and distinct trust – or materially change the terms of the existing trust, which can have serious tax and duty implications for the trustee and the beneficiaries.
So, what should you do?
Can you find a ‘copy’?
The first thing you must do is ASK EVERYONE if they have the original or a copy.
This means contacting current and past trustees, the presumed ‘settlor’ and beneficiaries, and the lawyers, accountants, banks, conveyancers, and insurance brokers you have engaged over the years. If the trust owns real property, you may get lucky and a copy of the trust deed may have been lodged with the Land Titles Office.
Sometimes, going back to the lawyer who set up your trust may be helpful. They may have a copy of your trust deed on file. We have been around for over 21 years and receive these calls all the time. However, the firm you used may have closed down, and a law firm is only obliged to keep client files up to 7 years (or shorter by agreement). If, the law firm does not have a copy of your trust deed, they may have a copy of the ‘precedent’ document they used when they set up your trust. This can be useful, as discussed below.
In any event, to remedy your situation, you will need to have evidence that you have made all reasonable efforts to find a copy of your trust deed, including evidence of searches and enquiries, and who made them.
Depending on whether you can identify the precise terms of your lost trust deed, you have several options to remedy the situation.
What are your options?
If you can’t find your deed, you can:
1. Continue without a trust deed
You can continue without a trust deed and attempt to administer the trust in accordance with the relevant State Trustee Act. However, this will not help you if a third party requires a copy of the trust deed, or the Act does not cover the relevant governance issue.
2. Adopt a new trust deed
If a copy cannot be located or the terms identified, you can prepare a Deed to Adopt New Trust Terms. As mentioned previously, this may trigger adverse tax consequences.
3. Execute a Deed of Confirmation
If a copy of the trust deed can be located and you can identify the terms of the trust, you can prepare a Deed of Confirmation to restate the terms of the trust. This may be sufficient for the purposes of a bank or government departments. This deed must be prepared very carefully to avoid triggering a ‘resettlement’ of the trust with its resulting bad tax consequences. That said, there is no guarantee this Deed of Confirmation will be accepted by third parties, and it may not help you if there are disputes about control or distributions.
4. Make a Supreme Court application
If, after taking all reasonable steps, the trust deed can’t be found, it may be that a formal application to the Supreme Court is required. In this application you will be seeking to confirm the terms of the lost trust deed, and to excuse the trustee from any prior breaches of trust. The likelihood of success will depend on what steps the trustee has taken to locate the lost deed, and their ability to confirm that the unexecuted/unstamped version represents and replicates the terms of the original lost deed. This is the most certain but also the most expensive approach.
Which option should you choose?
Although a destroyed or lost trust deed is a common problem, and normally can be dealt with by preparing a Deed of Confirmation, 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 Supreme Court for assistance.
As a trustee (or controller of the trustee) you must make a practical decision about what approach is going to be best in your circumstances. You must consider whether the trust can be properly administered, the risk of not taking a course of action, and the nature and size of the trust fund.
As a final point, if you are administering a trust without a trust deed, and a dispute arises with a potential beneficiary or regulatory authority, the presumption of regularity may be helpful. This is a common law principle that all is presumed to be rightly and duly performed, until the contrary is proven. However, for the purposes of dealing with banks and other institutions which have ‘know your customer’ (KYC) requirements, (and who want to see the trust deed), this is unlikely to be sufficient.
How we can help?
The information contained in this post is current at the date of editing – 23 September 2023.