The trust deed for a family trust is an essential trust document. If the original trust deed is lost, misplaced or accidentally destroyed, this can lead to negative financial and tax consequences.
What is the Trust Deed?
A family trust is established by a document called a ‘trust deed’. The trust deed will set out who is the Trustee, the Appointor and the Beneficiaries. The trust deed will also set out the powers of the Trustee, and the entitlement of the beneficiaries to receive income and/or capital of the trust. The original trust deed must be signed by the Settlor (the person who transfers the original trust property to the trust) and the Trustee.
The original signed trust deed is an essential trust document as it validates all decisions and distributions made by the Trustee. The location of the original trust deed should always be known.
I cannot find our original family trust deed. Is this a problem?
Yes, it could be. Below are some examples of problems which could arise:
- The Trustee has purchased property for the trust and has applied for finance. The lender has requested a certified copy of the original trust deed. The Trustee is then under pressure to find the original trust deed, or potentially default on the purchase.
- A dispute arises between family members. If one family member discovers that the original trust deed has been lost, they may challenge certain decisions and distributions made by the Trustee because there is no document that sets out the powers of the Trustee and how income and capital may be distributed from the trust. Aside from the potential for causing disputes, this could also result in negative financial and tax consequences for the Trustee and beneficiaries.
If I can't find the original trust deed, can I use a copy?
A copy is not a substitute for the original. If there is sufficient evidence that the copy is identical to the original signed trust deed, then a practical decision may be made to rely on the copy as evidence of the contents of the original. However, in the absence of Court approval, there is always a risk that decisions and transactions undertaken by the Trustee could be challenged, or investigated by the relevant tax authorities. You may also run into difficulties if the original or a certified copy of the trust deed is required, for example, by a bank.
Can I just execute a replacement trust deed?
In some situations, you may be able to execute a replacement trust deed (which, in effect would be a deed to confirm the original terms of the trust). Specialist legal and accounting advice should be sought before taking any steps to execute a deed to confirm the terms of the original trust. This is because such actions could be regarded as creating a new trust (called a ‘resettlement’ of the trust). This may then trigger liabilities for capital gains tax and stamp duty (for property). Furthermore, transactions undertaken by the Trustee prior to the execution of the new deed may still be challenged by family members, or investigated by the relevant tax authorities. It is also important to ensure that there is certainty about whether the proposed terms for the replacement trust deed are identical to the original deed.
Should I make an application to the Court?
If the original trust deed has been lost, the only way to have complete certainty that transactions and decisions of the Trustee are valid is to make an application to the Supreme Court in your state or territory. The Court will require clear and convincing evidence of the terms of the original trust deed. Such applications have been successful where:
- A copy of the original signed trust deed wasfound 
- A copy of an unsigned trust deed was found 
- Neither the original trust deed nor a copy could be found, but the solicitor who drafted the trust deed gave evidence to the Court of the terms of the trust
The costs of such an application will be expensive, so ultimately you will need to weigh up these costs against the risks involved with continuing to operate the trust without an original trust deed.
Mantovani v Vanta Pty Ltd (No 2)4 - a cautionary tale
This was a recent Victorian Supreme Court case where an original family trust deed had been lost, and a copy could not be found. The Court ruled that the family trust failed.
- Mrs Mantovani had four adult children. In 1976 a family trust was created and Mrs Mantovani transferred several properties to the trust. Over time, distributions totalling more than $120,000.00 had been paid from the trust to her children. After Mrs Mantovani died, the trust was controlled by two of children. A dispute arose between them and the other child and it was it was discovered that the original trust deed had been lost. A copy could not be found. The other child argued that the family trust failed as the contents of the trust deed were not known.
- Despite the controllers of the trust presenting to the Court a copy of the schedule to the trust deed and trust financial statements as evidence of the contents of the trust deed, the Court held that the trust failed because the contents of the original trust deed could not be ascertained. The schedule and financial statements for the trust were not sufficient to demonstrate the contents of the trust deed. All the property held in the trust therefore formed part of Mrs Mantovani’s deceased estate, which benefited the third child. Further, the Trustee was ordered to pay the deceased estate an amount equal to all distributions made from the trust to beneficiaries during the previous six years.
- Always know the location of the original, signed trust deed for your family trust. Your solicitor or accountant will usually store such documents on your behalf, free of charge.
- If you are an accountant, ensure that you sight the original or a certified copy of the original trust deed (and any later deeds of amendment) before advising on distributions from the trust, or other trust transactions. Do not assume the terms of the original trust deed are ‘standard’.
- If you have lost the original trust deed, seek advice from an experienced lawyer as soon as possible, regarding your options. Don’t wait until you need to show the trust deed to a bank or authority.
 Sutton v NRS(J) Pty Ltd  NSWSC 826
 Re Thomson  VSC 370 and M & L Richardson Pty Limited  NSWSC 105
 DR McKendry Nominees P/L 2015 [VSC] 560
 Mantovani v Vanta Pty Ltd (No 2)  VSC 771
How can Sharrock Pitman Legal assist?
At Sharrock Pitman Legal, we have Accredited Specialists in Wills & Estates and Commercial Law who are experienced in advising clients in relation to complex estate matters involving complicated trust and significant financial arrangements.
If you require assistance in relation to your Family Trust, or to prepare a Family Trust, advice should a dispute arise or assistance with an estate more generally, please feel free to contact our Wills and Estates Law team on 1300 205 506 or email firstname.lastname@example.org.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
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Binay is a Senior Associate of Sharrock Pitman Legal.
He is an Accredited Specialist in Wills and Estates law, having been accredited by the Law Institute of Victoria. He is part of our Wills and Estates group and deals with Wills and Estates planning and Probate. For further information, contact Binay on his direct line (03) 8561 3329.