As an accountant, financial planner or someone with your own trust, you may wonder what Trustee lawyers in Sydney look for when rectifying a trust deed or how they go about it.

Rectifying a trust deed corrects one or more mistakes in the trust deed which does not accord with the original intention of the parties.

The process

The process involved in rectifying a trust deed is as follows:

• review the trust deed and identify the relevant mistake(s); and

• confirm with the parties to the relevant trust deed, for example:

• in relation to an original trust deed – the settlor and the initial trustee(s);

• in relation to a deed of variation – the trustee(s) and the appointor(s)/principal(s)/guardian(s); and

• in relation to an SMSF bare trust/holding trust arrangement – the SMSF trustee(s), the bare trustee(s)/holding trustee(s) and the SMSF member(s),

their original intention with regards to the subject-matter to which the mistake(s) relate.

After this process is complete, the parties to the trust deed enter into a Deed of Rectification that:

• identifies the mistake(s) in the trust deed;

• outlines the original intention of the parties with regards to subject-matter to which the mistake(s) relate; and

• rectifies the trust deed by correcting the mistake(s) therein so as to align with the original intention of the parties as always intended.

Common reasons to rectify a trust deed

Trust deeds are often rectified for the following reasons:

• original trust deeds incorrectly spell the name of a relevant stakeholder (this is often an issue for lenders if the trust is seeking to borrow);

• original trust deeds do not refer to the full legal name of a relevant stakeholder (again, this is often an issue for lenders if the trust is seeking to borrow);

• deeds of variation incorrectly refer to:

• the parties to the original deed or previous deeds of variation;
• the establishment date of the trust or previous deeds of variation;

• clause references pursuant to which specific actions were purportedly carried out; and

• SMSF bare/holding trust deeds refer to the incorrect asset.

Conclusion

 With the prevalence of trust deeds, deeds of variation, SMSF deeds and SMSF bare/holding trust deeds, mistakes can occur and deeds of rectification are a formal way to highlight the mistake, identify the original intention of the parties in that regard and fix the issue.

If you or your clients need any assistance to rectify a trust deed, contact ineedachange@mosaictaxlegal.com.au.