There is some debate within the legal and accounting professions about whether or not a change of trustee needs to be done by a registered deed.
In Retravision (NSW) Limited v Copeland, Justice Young of the New South Wales Supreme Court indicated that, unless the trust deed expressly excludes or contains provisions inconsistent with Section 6 of the Trustee Act, the appointment of a new trustee is not effective until the deed of appointment is registered.
Many practitioners have taken this case to mean that all deeds changing trustee must be registered.
Our view is that if the trust deed specifically excludes the operation of Section 6 of the Trustee Act then registration of the change of trustee document is not required.
However, if there is no exception in the trust deed, it is prudent to change trustees by registered deed.
Some financiers require deeds changing trustees to be registered. If your bank’s lawyers take that view there is little you can do, other than change financiers, to avoid having to register the deed changing the trustee.
The taxation consequences of an invalid change of trustee can be significant. In the most extreme case all decisions made by an invalidly appointed trustee are, likewise, invalid.