Time to Update your SMSF Trust Deed? | Trekk Advisory

Time to Update your SMSF Trust Deed?

By Eryan Haddon

July 23, 2019

Self Managed Super Funds – Your Trust Deed may require an update.

There was a swag of legislative changes introduced in the 2017/2018 year and many Trust Deeds will no longer be sufficient to handle these changes.  

Some of these changes may not affect the activities of your fund now, but might when you want to do things in the future.  

Updating your Trust Deed will give maximum flexibility when considering strategic advice and we believe preparing a Deed Update to be the “Best Practice” for all funds established prior to April 2017.   

Read on below and consider all the points outlined and whether or not they apply to you, now or in the future, but fair warning, it’s not a riveting read.

The 15 Changes to SMSF Deeds required after the introduction of this new legislation in 2017 are to:

  1. Internally ‘rollback’ pensions to accumulation;
  2.  Segregate assets between accumulation and pension phases;
  3.  Reject contributions;
  4.  Refund contributions;
  5.  Deal with excess transfer balance tax and excess non-concessional contributions;
  6.  Allow income streams and Account Based Pension (grandfathered);
  7.  Specify guardians for incapacity and death;
  8.  Identify the Power of Attorney when living overseas for more than 2 years;
  9.  Resettle pensions with flexible timing without mingling with accumulation account;
  10.  Allow reversionary beneficiary nominations;
  11.  Provide for CGT relief;
  12.  Deal with segregated and unsegregated assets;
  13.  Cease or keep Transition to Retirement Income Streams;
  14.  Calculate member balances, across different funds; and
  15.  Calculate internal pension rollbacks to accumulation.

Pre-2012 SMSF Deeds fail to deal with these 10 issues:

  1. Removing clauses requiring the Trustee to do something that is no longer legal or beneficial;
  2. Changing the sections that are ‘regimented’ with unnecessary rules vs being ‘permissive’. There is no point stating mandatory SIS requirements. In fact, it is dangerous to re-state legislation. This is because it dates your deed;
  3. Accounting for an increased concessional contribution cap;
  4. Removing insurance cover where the conditions are out of date;
  5. Incorporating clauses about losing the pension at death or when the minimum payment has not been made;
  6. Allowing for excess concessional contributions taxed at member’s marginal rate (-15% offset);
  7. Updating the Investment Strategy to incorporate the ATO’s new Audit approach;
  8. Changing market valuation clauses to leave the mechanism for the Accountant;
  9. Allowing remuneration for non-trustee duties; and
  10. Allowing non-lapsing Death Benefit Nominations.

If you would like an SMSF Advisor to contact you for more information, please get in touch with us today!

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About Eryan

Director & Business Advisor

Eryan is an owner of Trekk Advisory and operates from our Townsville and Mount Isa offices. She's been in Public Practice for over 20 years because she loves working with business owners to achieve their version of success.

She has a Bachelor of Commerce from the University of Queensland and is a Chartered Accountant. She holds a Sub-Authorised Representative Certificate, making her licensed to provide SMSF advice. 

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