Lost Trust Deed! What to do?

A Trust deed is a legal arrangement that involves transferring of assets to the trustees.  Trust deed dictates the powers of trustees so that they can carry out their duties. With the help of trust deed, people can avoid bankruptcy and also it helps creditors to receive their payments.

However, misplacement of trust deed is quite common in Scotland. Clients fail to understand the importance of the trust deed. They are not too familiar with the process that needs to be followed if your trust deed is lost. Just by adopting the terms and conditions of replacement deed without trying to find out the misplaced deed, or trying to find out the original terms of a trust deed is quite a difficult process.

Stamp duty

Just by making a submission of replacement deed to the state revenue office can result in the valuation of trust assets, and enforcement of full stamp duty at conveyance rate on the gross value of the property that is owned by the trust.

What needs to be done?

A novel approach was taken under sector 63 of the Trustee Act 1925 to seek judicial advice, in a case of Porlock Pty Ltd NSWSC1243 per Young AJA.

The plaintiff in that case was the trustee of JDB Carr Trust number 2 that was established in the year 1957.  The settler of the trust was not known but the trust owned substantial assets. The final copy of the trust deed could not be found by anyone.

The question that was put forward before the court was whether it is justified to deal with the trust property in the proposed manner by the trustee. The secondary evidence was used as an affidavit that contained the terms of the contract. This was a part of the content of a letter that was drafted on the establishment of the trust. The basic terms of the contract were defined in the letter. A certain person was to be paid the income that came from the trust during his lifetime. After the death of the person, it was to be held as capital and income for his children at the time of his death or after having attained the age of 21 if more than one as equal shares. Also, affidavits were sworn that the terms of the contract were set out by the letter. The plaintiff’s solicitors placed the evidence in favor of searches made to find out the trust deed but were unsuccessful in finding.

The judgment held that since there was secondary evidence and the application was made for seeking judicial advice and that the trust deed actually was in existence, hence it could be held that the plaintiff held the property according to the terms included in the content of the letter. So, it is justified on the part of the trustees to act according to the terms of the trust.

Hence, it was decided that it is justified by the plaintiff to manage and administer the terms of trust according to the letter under section 63of the trustees’ Act. However, the procedure that is involved in these cases is quite complex. It involves rigorous efforts and inquiries to find the deed and filing summons. After that you will have to file an affidavit stating all the steps undertaken to locate the deed. There needs to be certain secondary evidence in order to justify the grounds for the management and administration of the trust in a particular manner.

To determine the terms of the trust at the time of establishment, inquiries of commercial provider need to be made. However all these can be avoided if you keep additional copies of the deed. To store the vital documents, facilities such as Virtual cabinet or other kinds of software programs can be used. You can also use a client portal to keep the trust deed securely. The accountant and the client should store the PDF copies of the deed. This ensures that there is more than one copy of the deed that is stored. Also, getting the best trust deed advice in Scotland can provide you more valuable alternatives.

Simply, making a submission of replacement deed to the state revenue office can result in enforcement of stamp duty on the value of the assets. So, it’s better to be prepared before-hand instead of being a victim of such a significant impost. You can take the help of trust deed services in Scotland if you wish to wish to clear off the doubts in your mind.

Leave a Reply