27/08/2015

Can an unsigned super deed still be relied on to regulate the members' benefits?

Upon the death of a member of a self managed super fund (SMSF), the trust deed of the fund may set out where that member’s benefits are to be paid.  But what if the only copy of the current trust deed that can be located is unsigned?  Is there a way to argue that this unsigned copy can be operative?  The answer is yes, according to a recent Victorian case.

An SMSF was established by a deed in 1986 (“the 1986 Deed”).  The establishment deed was then subsequently amended by a deed in 1990 (“the 1990 Deed”) and then again by a deed in 2000 (“the 2000 Deed”).  

The 1990 Deed was lost and the only copy of the 2000 Deed that could be found was an unsigned copy.  The 1986 Deed identified the trustees of the fund as Mr Thompson and Mr Crane.  The 2000 Deed identified the trustees of the fund as Mr Thompson and his wife, Mrs Thompson.

During the period from 2006 to 2013 there was evidence to show that Mr and Mrs Thompson both signed the financial statements and reports of the fund as the trustees of the fund.  Mr and Mrs Thompson both passed away and the executor of Mr Thompson’s estate was confronted with an issue in relation to the fund’s assets.

The 2000 Deed provided that where there was no designated beneficiary the death benefit is to be paid to the estate of the member.  In comparison, the 1986 Deed did not contain such a clause.  The executor of the estate asked the court to declare the unsigned 2000 Deed to be operative in order to terminate the Fund and have the assets of the Fund paid to the legal personal representative.

The executor argued that a “presumption of regularity” should apply.

The presumption is to be applied where an act that had occurred could only legally happen after a prior act has taken place.  The act that had occurred presumes the prior act has taken place.

In applying the presumption to the facts of the case, the executor argued that because Mr and Mrs Thompson signed the financial statements of the fund as trustees means that the prior act of signing the 2000 Deed either had to have taken place or it was probable that it had in fact occurred.  

The court agreed and held the fund’s assets were to be distributed in accordance with the provisions set out in the 2000 Deed.

Considerations to applying the presumption:

• the matter is in the past and incapable of being proved in evidence;
• it involves a mere formality;
• the presumption will serve to prevent an unwholesome uncertainty; and
• the circumstances of the case add some element of probability.

Further points to note about the presumption:

• it can be rebutted;
• policy considerations can prevent the presumption from applying; and
• the circumstances in this case were unusual and specific.

Whilst this Victorian case illustrates the possibility of having an unsigned deed declared operative, is it worth taking a gamble?

In order to prevent the risks of assets not being disposed of according to a member’s current trust deed, an electronic copy should always be stored.  Taking this step would also reduce the need for an executor to go through a time consuming and costly court process.

TownsendsLaywars always recommends sending an electronic copy of the signed and dated deed to us for storage.  SUPERCentral can also store electronic deeds and other documents for a fund in the SMSF’s Deed Vault.  As the saying goes, it’s better to be (in the) safe than sorry.