Governing Law of Trusts

In the case of a trust of movables, the proper law of settlement is the law intended by the settlor  to govern all matters. This intention is either expressed in the trust instrument or gleaned from the subject matter of the trust and the circumstances surrounding its creation. The validity of a trust and the choice of proper law must be made as at the date of creation of the trust.

Australia ratified the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, which came into force in Australia on 6 March 1995. Australia is also a member of the Hague Conference that created the Hague Convention on Private International Law, and recognises foreign judgments that are executed in Australia in accordance with the terms of that Convention.

Australia is a signatory to the Hague Convention on the Law Applicable to Succession to the Estates of Deceased Persons (1989) and the Hague Convention on the Law Applicable to Trusts and on their Recognition (1991) and has enacted the Trusts (Hague Convention) Act 1991 to implement the latter within Australia.

Trusts (Hague Convention) Act 1991 – Schedule 

Convention on the law applicable to trusts and on their recognition.

Articles 6 and 7 State:

Article 6

A trust shall be governed by the law chosen by the settlor.
The choice must be express or be implied in the terms of the instrument creating or the writing evidencing the trust, interpreted, if necessary, in the light of the circumstances of the case.
Where the law chosen under the previous paragraph does not provide for trusts or the category of trust involved, the choice shall not be effective and the law specified in Article 7 shall apply.

Article 7

Where no applicable law has been chosen, a trust shall be governed by the law with which it is most closely connected.
In ascertaining the law with which a trust is most closely connected reference shall be made in particular to—
a) the place of administration of the trust designated by the settlor;
b) the situs of the assets of the trust;
c) the place of residence or business of the trustee;
d) the objects of the trust and the places where they are to be fulfilled.

 

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