To Fix or Not to Fix
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Acis, current as of: 28 July 2016.
Nominating the State laws applicable to a trust can sometimes cause concerns for practitioners who are unsure about the ins and outs of the decision.
Most modern trust deeds elect to adopt the laws of a specified State as the jurisdiction for the trust, meaning the laws of that State will govern the trust. This choice of governing law is, however, not necessarily conclusive.
By way of example, why would you establish a trust in Sydney and then choose its governing law to be that of Outer Mongolia? Extreme, perhaps, but it illustrates the point. Our courts will generally ignore a choice of law if it appears to have been made for ulterior motives, such as to avoid the application of a law which might otherwise have applied.
Usually, the courts tend to apply the law with which the trust has its closest and most substantial connection, taking into consideration:
It seems these factors, from the court’s point of view, are more relevant than the specific choice of law or where the trust deed might be executed.
The choice of State or Territory is entirely up to you; however, you should think through the following:
Please call us on 1800 773 477 or email if you would like further insight or assistance in the choice of jurisdiction for your trusts.
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