Do I update my SMSF trust deed?

9 August 2017

By Kelly Wealth Services

It’s been a while

Your SMSF is going well.  Investments are producing great returns and members of the fund are happy with the results.  The structure is right and the administration has been taken care of.

All is good right?  Hmmm…But how long ago was your fund established? Ten years ago you say!!!  My word, how old is your SMSF trust deed then?

The big question

The big question to ask is, should I or shouldn’t I update my SMSF trust deed?  Superannuation rules in the past ten to twenty years have changed considerably and if the trust deed hasn’t been updated frequently or at all, you may face certain risks, some of them potentially high. You may not know you’re in breach of your deed until you’re audited. In other words, the change you perform in your SMSF may be an allowable superannuation rule in line with current legislation, but if your trust deed may not allow for it.  Sadly to say, if your trust deed does not allow for it then it’s not an allowable rule for you or your fund.

What do you do?

Lucky their are alternatives.  The first alternative is a deed of variation.  The purpose of a deed of variation is to replace the terms of an existing trust deed but without actually removing the existing trust deed, providing a similar behaviour to replacing a trust deed.  Yes I know, confusing but acceptable by all means.

The second alternative is that you actually do update your entire SMSF trust deed, perhaps on a regular basis.  An update may not be for everybody but this may not be as scary as above for some.  In fact many funds can benefit from updating the trust deed with a new one and not be so much affected by this action.

Yes or No?

In conclusion to the big universal question, do I update my SMSF trust deed?  That I would advise you consult with your three wise men, the accountant, the administrator and as always your trusted financial planner.  These valuable discussions will surely reveal a more definitive answer to the big universal question and provide insight into the right decision for you and your fund.

 

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