How do we amend an inter-vivos trust amid lockdown restrictions?

With Covid-19 travel limitations there is no way we can get the necessary documents originally signed by my son.

My wife and I are pensioners and the sole trustees of an inter-vivos trust. The sole beneficiary is our son who lives in the US. We need to change the trust deed, which provides that it may be changed by a resolution of all the trustees and all the beneficiaries. We have been advised that we must file both originally signed minutes of the meeting and an originally signed contract between the trustees and beneficiaries.  

With the lockdown there is no way we can get those documents originally signed by my son. Will the Master accept a certified copy of those documents signed by our son, or what should we do? Will the changes be effective [from] the last date of signature by the trustees or beneficiary, or the date when the Master has accepted the changes to the trust deed?

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An inter-vivos trust is a contract the founder of the trust enters into with the trustees to administer the trust assets for the benefit of the beneficiaries. In legal terms, this is referred to as a stipulation alteri. Once the beneficiaries accept the benefit flowing from the trust, they also become party to the agreement. The agreement will then consist of all three parties, namely the founder, trustees and beneficiaries.

Because the trust is in effect a contract, it can be amended by agreement between all the parties involved. This would be an amendment flowing from the common law application of the law of contract. The trust deed itself may also contain a clause that sets out the procedures to be followed in order to amend the trust deed, typically referred to as the variation clause. When dealing with the amendment of a trust deed, it is therefore important to understand which of these two options provide the authority for the amendment, in other words contract law or the trust deed itself, as it may have different requirements to affect the amendment to the trust deed.

How the Master’s Office must deal with the amendment of a trust deed is set out in the Chief Master’s Directive. In this document, it states that ‘it is the Master’s duty to ensure that the provisions of the trust instrument (trust deed) are adhered to, including the procedures prescribed in the trust instrument for the amendment of the trust deed’.

It states further that: ‘The Master must, before filing trust amendments, ensure that the amendment complies with the prescribed provisions regarding amendments, and that it does not violate any provisions protected from amendment in the trust deed.

‘There is however, no need for the Master to question amendments lodged without any reasonable ground to believe that the amendment procedures were not adhered to, as the trustees are responsible for the legality of the amendments.’

Where the Master’s Office requires an original document to be submitted, it does so in fulfilling its responsibility to ensure that the provisions of the trust document are adhered to.

With the current relaxing of the lockdown to Level 1 and similar relaxations elsewhere, it is unlikely that the Master will vary the requirement set by them of receiving the original documents before registration of the amendment.

The question of at what point the amendment becomes effective is, however, an interesting one. If we keep in mind that a trust is in effect a contract and that such a contract can be amended by agreement between all parties involved, it may follow that the amendment becomes effective when all the parties have agreed to it, i.e. at the date of the last signature. If, however, the amendment was done by virtue of the variation clause in the trust deed, it may have different requirements. It is therefore important to get professional advice in this regard as it may vary depending on the facts of the case.

Do you have any questions you would like answered by registered financial planners?

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