As Accountants, we are constantly dealing with clients’ family trusts which have been established under the terms of a trust deed. The terms of trust deeds are wide and varied but are usually intended to last multiple generations. Inevitably, at some point in time in, a family trust’s lifespan it will be necessary to amend its trust deed.

Reasons for amending a trust deed may include:

• Changing income and capital provisions to take into account updated tax laws and for tax planning purposes.

• Changing control of the trust by changing the appointors or trustees.

• Dealing with death, bankruptcy and incapacity of trustees, appointors and guardians.

• Providing for succession to the next generation including ensuring appointors and guardians can nominate successors during their lifetime.

• Addressing evolving family events such as marriages and divorces.

• Ensuring the trustee has sufficient powers in relation to:

1. borrowing, lending and obtaining financial accommodation;
2. dealing with unpaid present entitlements, sub-trusts and the blending of money;
3. making in-specie distributions.

• Ensuring the provisions for varying the terms of the trust are adequate in the circumstances.

It may be tempting to let sleeping trust deeds lie, however, this can lead to incorrect or non-advantageous distribution of income, distribution made to non-beneficiaries, trustees acting outside of their powers and sometimes even control unintentionally ending up in the wrong hands.

Having an outdated trust deed can also hold up bank financing when you are borrowing within a trust, which in the worst case could cost you a vital opportunity.

We will be writing to those with older Trust Deeds in early 2024 recommending a deed review and update where necessary, using a law firm expert in the field of trusts, Irdi Legal. If you think a review of your deed is more urgent, please contact Smith Thornton to discuss the required steps and costs involved.