What should I do if I’ve lost my trust deed?

The scenario of a misplaced trust deed is unfortunately a far-too common one. The consequences of losing a trust deed can also be serious. Australian banks, for example, operate under “know your customer” policies. Under such policies, banks will not allow new trust accounts to be opened, and may in fact freeze existing bank accounts, if they cannot be supplied with a validly executed (and sometimes certified) trust deed. A trustee’s failure to maintain proper account of the trust’s documents is also a breach of trust, and a trustee can be personally liable to account for a loss derived from a breach.

There are a number of different courses of action that can be taken when a trust deed goes missing. A replacement deed can be entered into between the trustee and beneficiaries. If the trustee has an unexecuted copy of the deed they may be able to administer the trust in accordance with that document. These solutions are not without their risks, however. Executing a replacement deed, for example, is judicially untested, and may in-fact amount to a resettlement of trust. Such a determination would bring along with it CGT and stamp duty consequences.

Where a trust deed goes missing, the only course of action that will provide a trustee with certainty is to apply to the Supreme Court for judicial advice as to whether the trustee is justified in administering the trust in accordance with terms proposed to the Court. Section 63 of the Trustee Act 1925 (NSW) (‘the Act’) allows a trustee to ‘apply to the Court for an opinion or advice or direction on any question respecting the management or administration of the trust property, or respecting the trust instrument.’ A trustee that acts in accordance with any advice or direction given by the Court will be protected from liability concerning the subject matter of the advice.

A trustee seeking advice under s 63 of the Act will need to satisfy two elements. First, the trustee must provide evidence that the trust deed actually existed. Second, there must be evidence as to the terms of the trust. What satisfies these two elements will depend on the particular facts of an individual matter, however the evidence must be ‘clear and convincing’[1]. Case law demonstrates that the following types of evidence will go towards satisfying the two elements:

  • evidence of a bank account that has been operated by the trustee;
  • administration of the trust in accordance with copy of the trust deed, that is either signed or unsigned;
  • administration of the trust in accordance with a copy of a trust deed of another trust that is purported to be held on the same terms as the trust in question;
  • any letters of other documentation setting out or describing the terms of the trust; and
  • trust accounting records that may be held by the trustee or the trust accountant.

Whilst seeking judicial advice may not be the cheapest or most expedient solution, it is the only way that a trustee can be guaranteed certainty when administering a trust. A trustee acting in accordance with judicial advice will be protected from any claims relevant to that advice brought against the trustee. It will also diminish the risk of CGT and stamp duty consequences that arise as a result of a trust resettlement.

If you would like further information concerning any of the issues above, please contact us at peter@petergell.com.au or josh@petergell.com.au.

[1] The Application of M & L Richardson Pty Ltd [2021] NSWSC 105.

Peter Gell

Peter was admitted as a solicitor in 1981 and holds qualifications in law and a Masters degree in taxation conferred by the University of NSW. Peter practises in taxation advisory, estate planning and wills, probate and commercial law.