By Trinette Hartley, 29 August 2013
Was it correctly drafted in the first place or will the person who drafted the deed, when called upon during a dispute, testify (like the drafter in the case of Potgieter v Potgieter) that a detrimental statement relied upon by the counter party is “without any meaning and was never intended to form part of the document” and that it “unintentionally found its way into the draft” because he “slavishly copied a precedent without realising that the statement was inapposite to the deed that he prepared”.
How will you know whether your trust is effective, practical and up to date? How can you tell whether there are any “unintended” clauses that were “slavishly copied” into your trust deed?
The best way of ensuring peace of mind is to have the trust deed reviewed by a qualified trust practitioner. This person will go through the trust deed and compile a comprehensive trust audit report setting out any problem areas and making the necessary recommendations in order to address those problem areas.
There are many potential problem areas, but the following will give you an idea of what to look for next time you read through your trust deed:
If you’ve identified any of the above-mentioned pitfalls or any other provisions that made you uneasy, you should consider having the trust deed reviewed by a professional. Not only will a professionally drafted audit report expose the potential pitfalls in your trust deed, but it will also be a useful exercise in the proper management of the trust. The first step in properly managing a trust is to read and understand the provisions of the trust deed. This exercise will cause the trustees to read the trust deed, to question any provisions that they don’t understand and to understand those provisions going forward.
If you are not sure about the validity of your trust, it is advisable to contact a qualified trust practitioner who will be able to determine whether the trust was validly created and, where there is a problem with the validity, be able to provide a solution.