Print trust deed until all states go electronic

paper trust deeds

NSW has moved ahead of other states and territories with electronic trust deeds, but trustees should still opt for paper until the move is universal.

SMSF trustees should fully examine and sign a paper version of any trust deeds they are creating to ensure it can be executed anywhere in Australia and continue to do so until all states and territories allow electronic deeds, an SMSF legal expert has said.

DBA Lawyers special counsel Bryce Figot said a change to New South Wales legislation in 2018 means SMSF trust deeds can be created in electronic form and electronically signed in that state, but currently NSW remains ahead of other states in implementing that change.

Figot said this was important to keep in mind for SMSF trustees considering who may execute their trust deed in the future as it was possible that may occur in a different state or territory from the one in which the deed was drafted.

He made the comments as part of a recent webinar in which he referenced the case of Booth v Cantor Management Services Pty Ltd from 2016, where an SMSF trust deed was signed in Queensland while the registered office of the trustee company was in Victoria.

The deed contained a clause stating it was “governed by the laws of the state or territory of Australia in which this deed is executed” and following the death of the member there was a dispute over a binding death benefit nomination, which was heard and decided in South Australia, as the executor lived there.

“The state where jurisdiction was applied was South Australia because the executor was resident there, and so there was enough of a nexus to hear the case in that state. No one could see that coming at the time the deed was signed, and how can a trustee ever be sure where their executors will be residents when the trustee dies?” Figot said.

“In light of the outcome in Booth v Cantor, can you ever have any real confidence as to which jurisdiction applies?”

He said until all the states and territories have electronic documentation, trustees needed to have paper trust deeds that would satisfy the requirements of every legal jurisdiction in Australia.

“So print the full, whole, entire document and if it is a 70-page document and only one page needs signing, that’s too bad. The common law hates the environment,” he said.

“Sign it with an old-fashioned wet signature. The common law also hates docu-sign and convenience.

“This is not a big deal in NSW, but there is no certainty a deed will only be challenged in NSW.”

He added some states also required the addition of a witness, while others did not, and it was important to include any additional requirements on each printed document.

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