Following the great discussion on this earlier I decided to track down what happened to the settlement of the first trust we ever put together. As when this was done we were given no advice of significance of a settled sum and identification of it.
Below is correspondance direct between my lawyer, myself (Trustee) and financial advisor. The Trust type is a Discretionary Trust.
My confusion reigns supreme....................
From: Trustee
To: Financial Advisor
………”One thing I have found out is that the validity of the Trust (should we ever go to court) is heavily tested on the identification of the original settled sum for the Trust. In this case ########## lawyers acted as the Settlor for the Trust.
We need to identify where the initial settled sum is. It is normally
handled in one of two ways, either the sum (in our case $10), is stapled to the original of the Trust Deed, or it is deposited as the FIRST entry in the Trust bank account, clearly identifying that it has come from the Settlor.
I note that the bank account didn't have any $10 sums placed in it,
certainly not the first entry. And also that the original of the Trust was kept with yourselves for the first year or two. The Trust deed says that Brett Davies lawyers provided the settled sum to the Trust. However, there is no $10 note pinned to the Trust, nor is there an $10 entry into the original Macquarie bank account. My concern is that the Trust can be proven invalid if we cannot identify the $10.
Could you check your records and perhaps ask Brett Davies Lawyers as to how the $10 was provided.
Thanks,
------------------------------------
From: Financial Advisor
To: Lawyer
We have received the following query from one of our mutual clients – you prepared the Family Trust Deed - $$$$$$$ Family Trust. Could you please advise me, and/or #### directly, of the solution.
regards and thanks for your time
Financial Adviser
Customer Service Manager
-----------------------------------------------------
From: Lawyer
To: Financial Adviser and Trustee
Subject: RE: Client Query on Trust Deed
Have a read of the first page of the deed which talks about the Settled Sum being paid and the Trustee acknowledges the payment.
This is how I have been doing it for 18 years. This is how it is done. Although I have not heard of anyone doing it since the 1970s you are welcome to staple $10 to the deed.
Happy to discuss.
##### Lawyers
-----------------------------------------------
From: Trustee
To: Lawyer
Cc: Financial Advisor
Subject: RE: Client Query on Trust Deed
Thanks very much. Apologies for my ignorance but I'm trying to get clear on this.
If I was taken to court over some claim in relation to the Trust, how do I prove that the Trust was in fact Settled. The Trust Deed ofcourse says that the Settlor provided $10 to the Trustee - who has acknowledged receipt of the settled sum. I've had advice that this is one of the areas first looked at if a Trust was to be challenged.
If we had to prove that the Trust was valid, would a requirement be the proof of the $10 existing, either by a physical $10 pinned to the Trust, OR the Trust bank account showing this $10. Again, proof of this has been cited to me as critical.
Or is your view that there is absolutely no requirement to prove the existence of the $10 in order to prove the validity of the Trust.
Kind Regards,
Trustee
------------------------------------------------------------------
From : Lawyer
To : Trustee
I think that someome is scaring you for no reason.
The evidence of the settled sum and acceptance thereof is in the Deed.
This is correct and acceptable at law.
Happy to discuss.
Lawyer
Below is correspondance direct between my lawyer, myself (Trustee) and financial advisor. The Trust type is a Discretionary Trust.
My confusion reigns supreme....................
From: Trustee
To: Financial Advisor
………”One thing I have found out is that the validity of the Trust (should we ever go to court) is heavily tested on the identification of the original settled sum for the Trust. In this case ########## lawyers acted as the Settlor for the Trust.
We need to identify where the initial settled sum is. It is normally
handled in one of two ways, either the sum (in our case $10), is stapled to the original of the Trust Deed, or it is deposited as the FIRST entry in the Trust bank account, clearly identifying that it has come from the Settlor.
I note that the bank account didn't have any $10 sums placed in it,
certainly not the first entry. And also that the original of the Trust was kept with yourselves for the first year or two. The Trust deed says that Brett Davies lawyers provided the settled sum to the Trust. However, there is no $10 note pinned to the Trust, nor is there an $10 entry into the original Macquarie bank account. My concern is that the Trust can be proven invalid if we cannot identify the $10.
Could you check your records and perhaps ask Brett Davies Lawyers as to how the $10 was provided.
Thanks,
------------------------------------
From: Financial Advisor
To: Lawyer
We have received the following query from one of our mutual clients – you prepared the Family Trust Deed - $$$$$$$ Family Trust. Could you please advise me, and/or #### directly, of the solution.
regards and thanks for your time
Financial Adviser
Customer Service Manager
-----------------------------------------------------
From: Lawyer
To: Financial Adviser and Trustee
Subject: RE: Client Query on Trust Deed
Have a read of the first page of the deed which talks about the Settled Sum being paid and the Trustee acknowledges the payment.
This is how I have been doing it for 18 years. This is how it is done. Although I have not heard of anyone doing it since the 1970s you are welcome to staple $10 to the deed.
Happy to discuss.
##### Lawyers
-----------------------------------------------
From: Trustee
To: Lawyer
Cc: Financial Advisor
Subject: RE: Client Query on Trust Deed
Thanks very much. Apologies for my ignorance but I'm trying to get clear on this.
If I was taken to court over some claim in relation to the Trust, how do I prove that the Trust was in fact Settled. The Trust Deed ofcourse says that the Settlor provided $10 to the Trustee - who has acknowledged receipt of the settled sum. I've had advice that this is one of the areas first looked at if a Trust was to be challenged.
If we had to prove that the Trust was valid, would a requirement be the proof of the $10 existing, either by a physical $10 pinned to the Trust, OR the Trust bank account showing this $10. Again, proof of this has been cited to me as critical.
Or is your view that there is absolutely no requirement to prove the existence of the $10 in order to prove the validity of the Trust.
Kind Regards,
Trustee
------------------------------------------------------------------
From : Lawyer
To : Trustee
I think that someome is scaring you for no reason.
The evidence of the settled sum and acceptance thereof is in the Deed.
This is correct and acceptable at law.
Happy to discuss.
Lawyer