It’s time to update your SMSF Trust Deed

When was your SMSF Trust Deed last updated?

The new superannuation laws that came into effect on 1 July 2017 have provided the biggest change for Self-Managed Super Fund’s (SMSF’s) since 2007 when ‘Simpler Super’ was introduced.

Following this, all SMSF Trust Deeds will need to be updated to ensure they remain compliant and can continue to best meet the needs of the fund’s members.

What are the specifics of the updates required?
Updating your Deed will bring in legislative changes concerning:

    1. Rejection or refund of contributions
    2. Isolation and management of assets between accumulation and pension phases
    3. Rollback of pensions to accumulation
    4. Management of excess transfer balance tax and excess non-concessional contributions
    5. Allowance of income streams and Account Based Pensions
    6. Nomination of guardians in case of incapacity and death
    7. For those living overseas for over 2 years the nomination of a Power of Attorney
    8. Capital Gains Tax relief
    9. Calculations for member balances and internal pension rollbacks
    10. Allowance of reversionary beneficiary nominations
    11. Ceasing or keeping Transition to Retirement Income Streams

Incorporating these changes into your SMSF Trust Deed provides more flexibility for optimising your SMSF performance. It also means that obselete clauses in your Deed would be removed which can help you better understand the current framework for legally operating an SMSF.

What is involved in updating the SMSF Trust Deed?
An amendment would be drawn up by a qualified lawyer to incorporate the changes into your existing deed. This would need to be signed off by the SMSF Trustees, along with minutes of a meeting where the decision is made to adopt the amendment in full. Our team has worked with a number of legal firms and can arrange for the amendment on your behalf.

What are the risks of not updating the Deed?
The most obvious risks of not updating your SMSF Trust Deed are:

    1. Actions based on outdated provisions in your Deed may lead to adverse effects on member benefits, attract administrative fines or lead to your fund being deemed not compliant
    2. Your death benefit nomination may no longer be binding or valid
    3. In the event of your death delays in receiving probate for your nominated legal personal representative may mean that trustees could distribute death benefits before your chosen representative can take control

I have only recently set up my SMSF, do I really need to update the Trust Deed?
It is important to make sure your Deed incorporates the new legislation. If your Deed was only prepared in the last 3 months by a qualified lawyer then it is unlikely to need updating as they should have incorporated the new legislation at the time it was prepared. Beyond that it would be wise to double check.

When should we have the update completed by?
If you are about to make important decisions concerning your SMSF, close to retirement or already in retirement/pension phase, then this is URGENT and we ask that you call us on 03 5339 3200 or contact us here to arrange your update. For all others, it is important and we suggest you aim to have your Deed updated before the end of the year.

Going forward, how often should an SMSF Trust Deed be updated?
Whenever there are changes to superannuation legislation that is not accounted for in your current Trust Deed, it is time to get it updated. Some providers recommend an update every year but that may be excessive. Focus Accounting will advise clients each time major updates are required.

If you are ready to arrange for your SMSF Trust Deed to be updated, or have any questions on the above, please call us on 03 5339 3200 or contact us here.

Thanks for reading.

Focus Accounting and Financial Group Pty Ltd is a Corporate Authorised Representative (No. 1254675) of Merit Wealth Pty Ltd (AFSL No. 409361).

The information contained on this website has been provided as general advice only.  The contents have been prepared without taking account of your personal objectives, financial situation or needs.  You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.

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