18 March 2022
Amending a trust deed
How is amending a trust deed different to amending and restating a trust deed?
Thank you for the question.
An amendment to the trust deed amends the terms of the trust.
Restating a trust deed is necessary where the original trust deed is lost. All parties to the trust deed restate the trust’s terms usually by reference to a copy of the original. That restatement deed may also amend the terms of the trust.
The By Lawyers Trusts guide provides:
If the amendments are too extensive or not in accordance with the provisions of the trust deed, they could raise the question of whether the trust has been resettled: for more information see Commissioner of Taxation v Clark [2011] FCAFC 5 and Taxation Determination 2012/21. If an amendment to the trust deed results in the trust being resettled, it risks triggering a liability for transfer duty and capital gains tax.
Before amending a trust deed, it is important to determine:
1. Whether the powers of amendment in the trust deed allow for the proposed amendment.
2. Which party has the power to make the change. For discretionary trusts this will usually be the trustee, but it could be the appointor.
3. The procedure for the amendment, whether by further deed, a minute of resolution, or a written notice. The By Lawyers discretionary trust deeds provide for amendment by further deed.
4. Whether there is a requirement to obtain the consent of any party to the trust deed. For a discretionary trust, it is a common requirement to obtain the consent of the appointor.
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