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

Previous View posts have 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.

With another 30 June here – and Happy New Year to all those who celebrate the end of the tax year – it seemed timely to consider one ‘fix’ for trust related errors.

The particular factual matrix here was a third party financier refusing to complete a transaction until steps were taken to resolve an issue their internal legal team had identified.

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.

The tax link – despite satisfying the financier, the document is unlikely to be binding on other 3rd parties (eg revenue authorities) unless later approved by court. ** For the trainspotters, ‘I can see clearly now’ is a song by The Hothouse Flowers from 1990.