In today’s electronic age, we can get by pretty well without the need of pen and paper. However, it’s important to question whether, just because we can sign something electronically, does it mean we should?
When it comes to executing trust deeds, you really want to get it right to ensure that the signatures are valid and binding. There are a lot of issues to be mindful of and it may be best to be safe and put pen to paper.
There Must Be a Witness Present
Individuals’ signatures need to be witnessed when executing a trust deed. It wouldn’t be acceptable for a party to a trust deed to use an electronic signature in such a way that the witness to their signature is not present when they sign.
Whilst there is no requirement at common law for witnessing of trust deeds, most States and Territories have passed legislation requiring witnessing.
Most trust deeds are worded on the assumption that any witness is actually present. For example, the attestation clause for NTAA Corporate’s discretionary trust deed for the settlor and individual trustees reads: “Signed, sealed and delivered by [trustee or settlor] in the presence of…” Thus it is necessary for the witness to physically be present when the trust deed is signed by the relevant party, and the use of electronic signatures cannot remove this requirement.
If a party and their witness were to both use electronic signatures, this may raise doubt as to whether the witness was actually present during signing, which in turn may invalidate the deed.
Assuming Witness is Present
Subject to the above, it would be legally effective for parties to a trust deed to use electronic signatures, provided that any witness is actually present when the party signs the trust deed.
Note that it is not strictly necessary for the different parties (the settlor and the trustee/s) to a trust deed to be present when they each sign the trust deed, although this would be preferable.
Notwithstanding, it is preferable for all parties and their witnesses to be present when the trust deed is signed. It would then be less likely for there to be any question that the trust has not been properly established.
Legislative Basis for Electronic Signatures
Subject to the witness issue, electronic signatures should be legally valid for trust deeds, having regard in particular to the Electronic Transactions Act 1999 (Cth), which (in part) refers to:
“The following requirements imposed under a law of the Commonwealth can be met in electronic form:…
(b) a requirement to provide a signature;
(c) a requirement to produce a document…”.
The Electronic Transactions Act and its regulations provide for various exclusions in relation to when electronic signatures should not be used. These exclusions do not appear to include trust deeds. NTAA Corporate’s in-house legal support refers us to the references to the Superannuation Industry (Supervision) Act 1993 and its regulations in items 142 and 143 of schedule 1.
Whilst electronic signatures should be acceptable from a strictly legal standpoint (subject to the witness issue), wherever possible, parties should physically sign trust deeds to be absolutely safe, for the reasons discussed above.
Companies Signing as Trustee
In relation to companies (i.e., where a trust has a corporate trustee), directors of the company could sign electronically, and this would be legally effective, subject to the constitution for the company.
Referring to S.127 of the Corporations Act 2001, a document being ‘signed by’ directors, is not defined, and there is no specified requirement, where there is more than one director, to be in each other’s presence when they sign.
Stamping Trust Deeds
For the purpose of stamping trust deeds, the NSW Office of State Revenue has stated that it will accept a printed copy of the electronically signed trust deed for stamping.
An Office of State Revenue representative further stated that: “There may be a ruling forthcoming regarding electronic contracts which could address electronic signatures.” Of course, it does not necessarily follow that the state revenue offices in other States and Territories would take the same view.
A final word…
Although you may gain time efficiencies by signing documents electronically, awareness of the issues is important and caution must be taken, particularly with the witnessing of individuals’ signatures. It may be best to continue with the standard ‘pen to paper’ approach to ensure the validity of your deed doesn’t come into question.
Based on article by NTAA Corporate
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Disclaimer
Information provided is general in nature only and does not constitute personal advice.
The information has been prepared without taking into account your personal objectives or needs. Before acting on any information you should consider the appropriateness of the information having regard to your objectives and needs.
