What happens if I lose my trust deed?

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Aintree Group Legal’s Series on Trusts – Part 1

It’s a very common question from those with a trust deed.

Trusts generally have a lifespan of 80 years, with control shared between several generations. It’s not surprising that paperwork gets lost over time.

But a lost deed can have important consequences.

Does a missing deed mean my trust fails?

A recent decision of the Victorian Court of Appeal has provided some clarification on this point.

An earlier decision concerning the Mantovani Family Trust had ruled that the trust – which had significant property holdings but also feuding brothers – failed for uncertainty due to a missing trust deed.

This caused shockwaves at the time.

On its face, the decision meant that losing a trust deed might be enough to bring the entire trust to an end.

The Appeal

In overturning the earlier decision, the Court of Appeal found that the Mantovani Family Trust did not automatically fail just because the trust deed was lost. Instead, the court held that the fragmentary records of the trust, coupled with trustee powers set out in the Trustee Act, were enough to keep the trust on foot.

Trustee inaction a breach of duty

However, that did not save the trustee from some withering criticism for its inactivity regarding the missing documents.

A trustee has a paramount duty to determine and adhere to the terms of a trust. Failure to do so means that all trustee action – including distributing income and capital to beneficiaries – is open to dispute. After all, how can a trustee prove that it’s allowed to follow a particular course of action if it cannot point to the provision in the trust deed authorising that action?

Where to from here?

Missing trust deeds are one of those problems that are unlikely to improve with age.

Trustees should undertake exhaustive searches to locate the original or a copy. Failing that, it may be possible to reconstruct the trust from contemporary records. In a worst-case scenario, it may be appropriate to seek guidance from the court.

These steps are best taken proactively. Things will get increasingly difficult if a beneficiary, bank or the ATO start asking for documents.

Luckily, technology can be on our side – at Aintree Group Legal we have a secure, digital vault where clients can store important documents like their Trust Deed and have them easily accessible when required. Find out more here.