Why do you review structures before creating documents?
By Brent Jones
Below are only a few of the issues we have picked up in our reviews:
• Recognised that sole power of appointment/removal of trustees for a family trust was being given to a third party. This was not what was intended and we were able to put in place other appointors who were involved in the trust (so that the client retained control of their own trust).
• A member had entered special instructions in their company order, which automatically flagged it to be reviewed by our support team. Upon review, we realised that there was a spelling mistake in the company name. Had we not noticed this, the company would have been registered with ASIC with a spelling mistake in the name. Further, as ASIC do not correct company names, they would have insisted on a company name change to be done at a $408 fee out of the accountant’s pocket.
• Shares in a company were to be held as trustee for a trust that we were also setting up, however the trust had different trustees. After checking the structure with the accountant, we changed the shareholder before registering, avoiding the need to transfer shares after registration to fix a mistake. Why we request an executed copy of trust deeds we’re amending Amendments we make to existing structures are prepared by our in-house legal team in accordance with the terms of the deed, so we ask for an executed copy of the original deed along with the instructions. In reviewing deeds against instructions, we have picked up on the following issues:
• Incorrect trustee of an SMSF– the accountant had not realised that the trustee had changed from a company to individuals in a previous deed of amendment. Further, the company that the accountant thought was still the trustee had since been deregistered. We picked this up and were able to update the deed as well as change the trustee to meet the accountant and clients’ intentions.
• Incorrect spelling of a client’s surname which was picked up comparing a 1994 deed against the instruction form. • Including the Principal Employer as party to the deed of variation to update a super fund’s deed, as this is who had the power to update. Had this been missed, the variation would have been invalid and required to be rectified at a later date.
• Using a client’s anglicised name or nickname instead of the full legal name.
These types of errors can be often overlooked by the accountant or person placing the order, only to have it picked up later as an issue by a bank and rectified, at further cost and delay. By reviewing the deed in conjunction with the accountant’s instructions we are able to recognise and prevent further issues due to discrepancies or missed deed requirements, ensuring that changes are made within the rules set out in the trust deed.