Trust Deed Defects: The Hidden Threat to Client Outcomes

Acis Legal, current as of: 18 September 2025.

As wealth moves from one generation to the next, trust deeds often sit at the heart of a family’s financial structure. However, more frequently than many appreciate, defects buried in deed documentation or in chains of amendments can undermine intentions, create unintended tax consequences, or even block transfers of control that were originally intended.


This article highlights where the risks tend to arise, what to look out for and how advisers can help their clients avoid weak links in their client’s trust structures when planning for the future.

Where Defects Commonly Emerge

Historical Chain of Trust Deeds

Over time, trust deeds are rarely static with amendments often being made to the trustee and appointor positions, key provisions such as those relating to income and streaming, trustee powers and foreign person exclusions to avoid foreign person surcharge duty when holding real property in an Australian state/territory.

Commonly with SMSFs, if amendments are not aligned with the original deed or past changes are missing, the chain of deeds will contain gaps. This creates uncertainty about the rules of the Fund and may cast doubt on the validity of trustee decisions made after the gap. Such issues may ultimately result in issues such as SIS breaches, non-compliance and even unintended outcomes when it comes to death benefit recipients and associated tax implications.

Execution & Formal Requirements

Even if deeds are well intentioned, they can be voided or have their validity challenged due to technical requirements not being met. Common issues that arise include:

  • deeds witnessed by individuals being a party to the deed;
  • omitting necessary entities from being party to the deeds; and
  • companies executing trust documents prior to their incorporation.


For example, consider the following scenario:

  • The original trust deed stipulates that the Appointor has the power to remove and appoint Trustees.
  • A deed of amendment is prepared under which the outgoing trustee resigns and appoints a new trustee in their place.
  • The validity of the appointment of the new trustee could be challenged as it wasn’t carried out in accordance with the terms of the original trust deed (i.e. by the Appointor).
  • Any subsequent action of the incoming trustee could also therefore be considered invalid as they were not validly appointed as trustee of the trust.

This illustrates how even small deviations from the original deeds terms can undermine later trustee actions.

Clerical Issues

Commonly, deeds will have clerical issues such as:

  • incorrect or incomplete names being listed for individuals;
  • the name of the trust or fund being incorrectly recorded; and
  • incorrect clauses relied upon to prepare an amendment.

Why Do These Issues Matter?

When trustees step down, appointors change, or beneficiaries shift across generations, the trust deed becomes the framework that ensures wealth passes as intended. Defects in that framework can derail succession plans, disrupt asset protection strategies, and cause disputes within families; precisely at the time when stability and certainty are most important.


Consequences may be as serious as the ultimate control of the trust lying with unintended persons, beneficiary entitlements not aligning with the intentions of the family group, legal challenges or adverse tax implications.

What Advisers Should be Doing

Advisers should ensure any trust deed amendments are valid and enforceable, reducing the risk of disputes, unintended transfers of control, or adverse tax outcomes. Best practice includes checking the entire chain of deeds, verifying the execution of deeds and checking consistency across all amendments.

At Acis, our legal team incorporates this checking process into every trust or SMSF amendment order. By identifying and raising issues early, we help advisers make informed decisions about rectification, saving time, cost, and reputational risk while ensuring transactions such as loan applications or restructures proceed without unnecessary delays.

Contact us to learn more about how we check the chain of trust deeds for every deed of amendment order we receive, to ensure that wherever possible, any historical issues in the chain of trust deeds are identified and rectified.

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