Tuesday, April 2, 2019

I can see clearly now ** – how to use a deed of clarification

Last week’s post, explored the difficulties that can arise when steps are taken (for example to change a trustee of a family trust) without having reviewed the trust deed.

Over the last few weeks, we have been working with an adviser where this type of situation had arisen and a third party financier was refusing to complete a transaction until steps were taken to resolve the issue.

In this particular instance, the only pathway we had been able to develop (and which the bank has accepted) has been to prepare a detailed 'deed of clarification'.

In many respects, this document is a self serving one, however in very general terms, it:

1) provides a summary of the purported changes;

2) confirms that the purported changes did not in fact comply with the deed;

3) restates the changes in a way that does in fact comply with the deed; and

4) has the trustee, appointor and some of the main beneficiaries of the trust all consenting to the changes, effectively with retrospective application.

** For the trainspotters, ‘I can see clearly now’ is a song by The Hothouse Flowers from 1990.