Errors in trust drafting: rectification of trust deeds, negligence and practical considerations

Trustees regularly exercise powers through deeds intended to implement their decisions. Unfortunately, ambiguities, errors or omissions can lead to these deeds failing to represent the trustees' true intentions. This can cause tax liabilities, operational challenges, and disputes over beneficial entitlements.

This article explores the legal remedy of rectification and practical steps trustees should consider when they discover errors, including cost management and potential negligence claims.

What issues arise from errors in trust deeds?

Trust instruments and supplemental deeds are the foundation of the trustees' powers and obligations. If they are defective, trustees may find themselves unable to exercise essential powers or manage investments effectively.

Common problems include:

• Tax consequences: errors triggering unintended tax charges (see our article Trustees' options when unintended tax consequences arise.
• Operational restrictions: missing or unclear powers disrupting trust administration or preventing distributions or restructuring.
• Beneficial entitlements: ambiguous or incorrect drafting may cause disputes or inequitable outcomes, such as one class of beneficiaries benefiting more than intended.

Errors in drafting have always been possible, even when trustees were professionally advised. However, the prevalence of artificial intelligence (AI) as a shortcut for drafting is likely to increase the risk of errors in complex and nuanced cases (particularly if trustees choose to proceed without professional assistance).

Options for resolving issues

When faced with a defective deed, trustees have several options:

• Deeds of variation or supplemental deeds: if permitted by the trust instrument, trustees may correct errors using existing powers. This is often cost-effective but not always possible. If a tax liability has been inadvertently created due to drafting errors, it is rarely possible to resolve it simply with new deeds.
• Court intervention: where trustees cannot remedy defects themselves, they may be able to apply to the court for A useful application is for rectification of the deed.

Rectification of trust deeds: the legal test

Rectification allows the court to amend a document that fails to reflect the signatory’s true intention. If granted, the correction is retrospective and the document is treated as correct from the outset.

Trust deeds are generally unilateral documents – ie there is no 'bargain'; the document takes effect through the sole trustee or body of trustees acting together. The principles applicable to the rectification of unilateral transactions are conveniently summarised in the case of RBC Trustees Ltd v Stubbs [2017] EWHC 180:

• As rectification is a discretionary remedy, it should be approached with caution and established by clear evidence of the true intention to which effect has not been given in the instrument. As the alleged true intention necessarily contradicts the written instrument, there must be convincing proof to counteract the evidence of a different intention represented by the document itself.
• There must be a flaw in the written document such that it does not give effect to the trustees' intention as opposed to the trustees merely being mistaken as to the consequences of what they have intended. For example, it is not sufficient merely that the document fails to achieve the desired fiscal objective.
• The specific intention of the trustees must be shown. It is not sufficient to show that the trustees did not intend what was recorded; they also must show what they did intend, with some degree of precision.
• There must be an 'issue capable of being contested' between the parties, notwithstanding that all relevant parties may consent to the application. The purpose and meaning of this requirement are not completely clear, but broadly it means that the rights of some persons will in law be affected by the rectification sought. This should be contrasted with a change only in a fiscal outcome.

Rectification: evidential considerations

Rectification claims are very fact and evidence-based. In Laird v Simcock & Ors [2023] EWHC 2054 (Ch), the rectification failed on the basis that there was not sufficient evidence. This case made clear that the intention that must be evidenced is the intention of the person who made the deed, ie the trustees, not (for example) their legal advisers.

The Court of Appeal in Day v Day [2013] EWCA Civ 280 confirmed that it is the subjective intention of the person signing the deed – ie what they thought and intended – that must be shown. There is no requirement for them to communicate this intention, or for it to be shared by any other person when the deed is signed.

However, for a rectification claim to succeed, there must be evidence of this intention for the court to consider which will need to include:

• Witness statements: the most useful evidence will be from the trustees, noting their own recollections and intentions. This can be supplemented with evidence from those who advised in the transaction or recall the events.
• Documentary evidence: meeting notes, trustee minutes and legal advice showing the purpose of the deed and the trustees' intentions. If issues only come to light after many years, key witnesses may be unavailable, and documentary evidence is vital. Trustees should ensure they keep good contemporaneous records in case they are needed in the future and review those files carefully before making any application.
• Subsequent dealings: the court may also look at evidence from the period after the document in question was signed – ie whether the trust was administered on the terms that had been intended but not achieved.

Negligence claims and defective documentation

If errors stem from professional advice, trustees may have a claim for breach of contract or negligence against advisers who failed to exercise reasonable skill and care. (Trustees who did not take professional advice should consider whether the beneficiaries may instead have a claim against them).

Trustees have a duty to act in the best interests of the beneficiaries and protect the value of the trust fund. Arguably, they are therefore under a duty to at least consider a claim against the advisers. If in doubt as to whether to pursue a claim, trustees could consider making a 'Beddoes' application to court for guidance.

Breach of contract or negligence claims are most useful in circumstances where the issue in the documents cannot be corrected and there is tangible loss to the trust – ie a tax charge. However, even if the issue can be resolved by deeds or rectification, trustees should also consider a claim to recover the legal fees of the remedial exercise.

Trustees should bear in mind two additional important factors in these claims:

• Limitation: claims for breach of contract must be brought within six years of the date of the breach and claims for negligence must be brought within six years of the date the damage is suffered. Often these dates are the same.
  
  This can cause issues if the errors are not discovered for an extended period. Trustees may still be able to bring a claim in negligence on the basis that they did not know of the error; the limitation period would then be three years from the date they acquired knowledge required for bringing the claim (but subject to an overarching cap of 15 years since the negligent act). For this reason, negligence claims are often preferred to contractual claims.
• Mitigation: trustees must take reasonable steps to limit the damage caused by the error, for example by pursuing a rectification claim. This is most applicable in the case of a tax charge: trustees cannot simply seek damages; they must take steps to minimise the charge where possible.

Key takeaways for trustees

Errors in trust deeds present complex challenges for trustees, but remedies exist. Rectification is a powerful tool for correcting mistakes. Trustees should also consider claims against negligent advisers to recover losses and the costs of resolving this issue.

Throughout, trustees should prioritise beneficiaries’ interests and seek specialist advice to navigate legal tests, costs, and practical implications.

We have had experience assisting trustees with these types of cases including:

• Representing trustees of a complex family trust in the successful rectification of deeds that had unintentionally triggered a tax liability following a restructuring, and settling the subsequent negligence action against the trustees' previous negligent advisers. We secured an indemnity for what was considered an uninsurable loss, alongside the costs of the rectification exercise.
• Advising trustees on a successful rectification claim concerning trust deeds executed 50 years ago. The application prevented significant adverse consequences for the family and required analysis of historic trustee records, complex trust law (including entails) and the principles of rectification. It was further complicated by the death of the senior family member who had executed the original deeds.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2026