For SMSF Accountants and Advisers, making sure their client’s SMSF Trust Deed are current may not always be top of mind. Typically, super legislation drives a client’s strategy and process as the SMSF Trust Deed gathers dust.
Like, SMSF Trustee’s themselves, many an eye glazes over at the thought of reading an SMSF Trust Deed and even trained professionals can have trouble fully comprehending some of the deeds out there.
Why is the SMSF Trust Deed so important?
A trust deed is the legal document that outlines the rules of operation for an SMSF. It sets out the SMSF’s objectives, the trustee’s responsibilities, and the rights and obligations of the members. The trust deed also determines how the SMSF will be managed, how contributions will be made, and how benefits will be paid out.
Not all Trust Deed are the same, but the information contained in an SMSF trust deed will usually include:
The names of the Members and Trustee
The objectives of the SMSF.
The types of investments that can be made
Rules that outline how the SMSF will be run, how member benefits will be paid , and the circumstances in which the SMSF will be wound up.
SMSF clients rely on their Accountants and Advisers to guide their SMSF journey and help keep them compliant. Understanding your SMSF client’s Trust Deed is an important part of the value you can add to your SMSF clients.
What to look out for
Some SMSF Trust Deeds don’t require constant updating. However, many deed templates are written in a prescriptive way making them much more likely to become out of date.
A
s SMSF legislation is constantly changing, the older and more prescriptive the SMSF Trust Deed, the more likely it will need updating so that the Trustee can continue to operate the SMSF in accordance with the super laws.
Having an SMSF Trust Deed that you and your SMSF clients don’t understand or that doesn’t allow their proper operation within the current law can result in unintended outcomes for you, your SMSF clients and their beneficiaries.
When to Update the SMSF Trust Deed
There are two main triggers for updating an SMSF Trust Deed, changes in legislation and changes in circumstances.
Changes in Legislation
The super laws can change in all sorts of ways, sometimes providing your SMSF Client’s with opportunities to utilise, other times restricting what they can do.
Some examples of recent legislative changes are:
New work test rules
Downsizer Contributions
Updated Bring Forward provisions
Conversion of legacy pensions
Increase in the number of SMSF members to 6
To be in the best position to maximise opportunities and reduce compliance risks for your SMSF Clients, their SMSF Trust Deeds needs to be current.
Changes in Circumstances
Another important reason to review your client’s SMSF Trust Deed is to ensure that it reflects their current needs and objectives. If their circumstances change, you should revisit their SMSF Trust Deed to make sure that it continues to reflect the way they want the SMSF to operate.
Selecting an SMSF Trust Deed provider
A good start to selecting a Trust Deed provider is to actually read their trust deed. If it doesn’t make sense to you as the trained professional there is a good chance it won’t make sense to your SMSF clients either.
Once you find a Trust Deed that you can read and understand, find out how the update process works and what it delivers to your SMSF clients.
Are you getting a true legal service or will you or your SMSF clients be subject to disclaimers with no way of knowing if the update documents being paid for can become the current rules of the SMSF.
A best practice update service will provide your SMSF clients with the choice of having their chain of deeds reviewed.
The service should also allow you to update your SMSF client’s important complementary documents such as death benefit nominations.
For many clients, their SMSF is their primary wealth accumulation vehicle. Having it subject to rules that don’t make sense or that become easily outdated can result in unintended outcomes for themselves and their beneficiaries.
In addition to be one of Australia’s most respected SMSF administrators, Keep It Simple Super, in partnership with Trusted Legal Solutions offers a suite of lawyer written and executed documents for SMSF’s. If you have any concern that your clients SMSF documentation isn’t ok, reach out to us.