SMSF Update | November 2024
This session provides a comprehensive overview of key updates from the superannuation sector over the past six months, along with practical strategies to effectively support your clients. […]
Emily Pritchard, current as of: 27 April 2023.
The absence of a trust deed makes it difficult to prove a trust’s existence and almost impossible for a trustee to efficiently administer the trust. Seemingly routine activities, like opening bank accounts, borrowing money and making distributions, can fail as a result. The Victorian Court of Appeal’s March 2023 decision in the case of Vanta Pty Ltd v Mantovani 1 highlights the crucial importance of trust deeds as well as the need to act swiftly when a trust deed cannot be found.
In an increasingly litigious world where divorce, blended families and estrangement are not uncommon, it’s easy to see why proactively locating trust deeds and keeping them up to date is fast making its way to the top of good advisors’ to-do lists.
Mantovani v Vanta Pty Ltd (No 2) [2021] VSC 771
In 2021, the Victorian Supreme Court held:
Vanta, Nicola and Salvatore appealed the decision of the Victorian Supreme Court.
Vanta Pty Ltd v Mantovani [2023] VSCA 53
The Victorian Court of Appeal was satisfied that the secondary evidence identified the essential terms of the Trust and that it satisfied the three certainties test: certainty of intention, subject matter (trust property) and objects (beneficiaries). As a result, on 16 March 2023, it set aside the orders previously made by the Victorian Supreme Court and ordered that new proceedings be commenced to determine what orders should be made to enable the Trust to continue to be administered in a proper fashion or, if the Court determines, to be wound up.
Despite the Court of Appeal holding that the Trust property continues to be held by Vanta as trustee of the Trust, the terms of the Trust and the conditions on which Trust assets are held are yet to be determined. It is possible that the Court orders that Vanta (controlled by Nicole and Salvatore) should be removed as trustee and a new, independent trustee be appointed to enable the Trust to be administered going forward. The Court of Appeal noted that they had not been required to determine whether Vanta committed any other breaches of trust or whether Giovanni had any other remedies against Vanta, “such as an order for the taking of accounts or an order for the removal of Vanta as trustee.” 3 They also noted that:
We will continue to follow this case and keep our clients updated, leaving them to focus on what they can be doing to mitigate these kinds of risks for their clients. Here are our top tips:
Don’t wait until an issue arises in relation to a trust before you start looking. Commence an administrative project to ensure that trust deeds (and any amendments) for all trusts you look after can be located and that you hold copies.
Copies of trust deeds for any trusts set up with Acis in the last 10 years can be downloaded from the Acis Platform. For trusts set up using Acis’ Power of Attorney Service, signed copies will be available on the Platform. Get in touch if you’d like to know more.
If you’re looking for older trust deeds or those for trusts not set up through Acis, try other advisors (including former and current accountants, lawyers and financial planners), banks, titles offices and offices of state revenue.
It’s difficult to imagine how you can ensure trust distributions and/or other important actions are valid if you don’t read the trust deed to confirm. Ensure you (and/or your team) consult the trust deed whenever actions in relation to a trust are proposed, to ensure their validity.
Proactively keeping trust deeds updated and issue free is increasingly becoming a focus of advisors. The outcomes are far better than discovering issues in the context of another matter, for example a marital breakdown or a transaction involving a bank. Acis has developed Trust Evolve™, a comprehensive product combining technical trust deed review and amendment with practical tools such as distribution templates and checklists. Find out more about Trust Evolve™ or Get in touch.
Where, despite extensive searches a trust deed cannot be located, consider a Deed of Confirmation and/or an application to the Supreme Court.
Acis can prepare a Deed of Confirmation, which:
It may also be prudent, or even necessary, for an application to be made to the Courts for a declaration regarding the validity of the terms of the trust.
The time is now. Be proactive and mitigate trust deed risk.
As always, the team at Acis is here to help. Contact us to discuss further.
1 Vanta Pty Ltd v Mantovani [2023] VSCA 53
2 Mantovani v Vanta Pty Ltd (No 2) [2021] VSC 771 and Vanta Pty Ltd v Mantovani [2023] VSCA 53
3 Vanta Pty Ltd v Mantovani [2023] VSCA 53, [154]
Acis does not provide advice in relation to commercial law, taxation, duty, company law or any other matter. We do not purport to provide advice nor should you construe anything in any correspondence with us, or material provided by us, as advice of any kind. |
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