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Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

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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 [1]
  • A copy of an unsigned trust deed was found [2]
  • 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[3]

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.
Take-away Points
  • 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.

[1] Sutton v NRS(J) Pty Ltd [2020] NSWSC 826

[2] Re Thomson [2015] VSC 370 and M & L Richardson Pty Limited [2021] NSWSC 105

[3] DR McKendry Nominees P/L 2015 [VSC] 560

[4] Mantovani v Vanta Pty Ltd (No 2) [2021] 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 sp@sharrockpitman.com.au.

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.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by a member of our Legal Team

,

.

Binay Prasad

For further information contact

Binay Prasad

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.

More on

Probate & Estates

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.

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

  • Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
  • There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
  • There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.
  • You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
  • It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

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.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE: 
(03) 8561 3318

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