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A recent Queensland case has provided a timely reminder about the importance of reading the trust deed — and satisfying its requirements — before taking any action under it. While the Supreme Court of Queensland in Perry v Nicholson[1] found that the documents prepared by advisers were compliant, it was a close call.
Jessica Leppert, Maddocks LawyersA Self-Managed Superannuation Fund (the Fund) was established in 2009 with the original trustees being Colin (the Deceased) and his daughter (the Daughter). In 2015, the Deceased arranged for his accountants to prepare various documents to remove his Daughter as trustee and replace her with his new de facto spouse (the New Spouse).
The documents prepared were:
The Daughter argued that these documents did not comply with the trust deed and that her removal, and the New Spouse's appointment, were invalid.
In particular, she based this on a clause in the trust deed which required the removal or appointment of trustees to be in writing and that the other trustee be immediately advised (the Relevant Clause).
The Court held that both the Daughter's removal as trustee and the New Spouse's appointment complied with the Relevant Clause as:
While the Court noted that the Minutes did not record the Fund's acceptance of the Daughter's resignation, this did not prove fatal.
This case serves as a timely reminder to trustees and advisers about the importance of reading the SMSF trust deed as a whole and ensuring you follow the provisions of the trust deed when taking certain action under it, such as replacing or appointing a trustee.
For example, the Cleardocs SMSF trust deed states generally that:
The deed in Perry v Nicholson, on the facts, bears some similarities to the Cleardocs deed. However the deed in that case seems not to have required an appointment to be made by deed. If it had contained such a requirement, then it is very difficult to see how the Court would have seen past that requirement for a deed: the Minutes would not have been sufficient.
Even without such a requirement, the parties' reliance on informal documents to effect the change of trustee caused considerable headaches (and cost) for all involved.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.
You can read earlier ClearLaw articles on a range of topics, such as:
Qualifications: LLB, Deakin University, BA (Political Science), Monash University
Paul is a Special Counsel in Maddocks Government and Not-for-Profit Commercial team. He specialises in:
Paul is Maddocks' main authority in relation to the Personal Property Securities Act 2009.
He has an in-depth understanding of the government sector, as his experience prior to Maddocks includes 13 years with the Victorian Department of Justice.
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