As trustee of your SMSF or a director of the trustee of your SMSF, it is sensible for you to consider updating your SMSF's deed every few years to help ensure your SMSF remains compliant.Julian Smith, Maddocks Lawyers
It can be dangerous for an SMSF to have an old deed with irrelevant and invalid clauses. For instance, those clauses may increase the risk that the trustee might:
Also, current deeds reflect the common requirements of third parties over time, such as banks, who make requests regarding the existence and form of conflict of interest clauses, or investment powers for an increasing range of market-traded financial products (in the nature of derivatives, swaps and futures).
If your fund has an old deed, it may not include the changes summarised below. Some of those changes reflect developments in best practice. Others reflect changes in the law.
Although none of these changes specifically require you to update the deed, they make it prudent for you to consider the implications of these changes for the SMSF's trustee(s) and member(s).
The changes are:
The changes outline caps and thresholds applicable to each new financial year as well as any new tax rates on superannuation contributions.
Members can elect how any death benefit will be distributed if a beneficiary predeceases them. The deed also reflects a number of recent developments in the industry — in relation to commuting pensions, SMSF investment strategies and how the Tasmanian SRO assesses duty on trust deeds.
In March 2012, the law changed to allow an SMSF with a corporate trustee and members under 18.
In July 2010, a number of changes were made to the law about SMSF borrowing.
New execution clauses in the Deed to meet the requirements of the banks.
Members can use binding Death Benefit Agreements that do not lapse after three years — the agreements bind the trustees until the member revokes or changes the Agreement.
Deed specifically mentions SMSF limited recourse borrowing as allowed by law ? again, this will help trustees who apply for a loan to acquire assets for their SMSF.
"Better Super" changes for the major legal reform of SMSFs implemented on 1 July 2007 and 20 September 2007.
Specific pension payment clauses removed as the pension types are now obsolete.
As always, these matters are complicated and involve a careful consideration of your SMSF's circumstances. You should seek legal advice on your SMSF's Deed.
If you have more than 10 SMSFs to update, Cleardocs is happy to assist. Simply send us details of all the SMSF funds that need to be updated and we can prepare the orders for you.
We'll send you the documents as soon as possible after receiving your instructions.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.
You can read earlier ClearLaw articles on a range of SMSF topics.
Julian Smith is a partner in the Maddocks Commercial team.
Julian advises extensively in the following areas:
Julian advises clients ranging from public companies servicing the wholesale financial services market to high net worth individuals and their advisers.
Julian has been with Maddocks since undertaking articles in 2001.
The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.