Trust Deed

A trust deed is necessary as it proves the existence of a trust.

It also establishes the rules and conditions that govern the use of the fund. As a trustee of your SMSF you must comply with all of the provisions contained in the trust deed.

A SMSF Deed

A trust deed is a legal document outlining the rules of the super fund. Every SMSF must have a trust deed to evidence its existence and every SMSF should update their deed to keep up with changes in legislation.

A deed covers very broad areas in high detail including:

  • Trustee powers.
  • Allowable investments.
  • Payment of member benefits.
  • Rules for changing trustee.

When you open up a bank account or purchase a new investment, the institution involved is likely to want to see a copy of the signed trust deed.

In many states there is no stamp duty on setting up a SMSF trust deed.

Can my SMSF trust deed override trust laws?

Trustees should remember that the deed can never override the legislation or trust law and must work within the boundaries of the law.

For example, you could draw up a trust deed that allowed the fund to lend money to your family but you would never be able to do so legally because it breaches the SMSF rules.

Can I draft my own SMSF trust deed?

Simple answer, no. A trust deed governs every aspect of your funds activities and can stretch to over 100 pages. It is unlikely you could word it correctly.

These days a standard off-the-shelf SMSF trust deed from a commercial provider will suffice and costs very little. If you wish to customise the deed for your requirements you will need to speak to a lawyer that specialises in SMSF deeds and trust law.

Many people want to add more protection to their super fund or exclude those that can be appointed trustee or member of the fund.

What happens if I lose my SMSF trust deed?

This is a serious problem. Without a trust deed there is no evidence that your SMSF has been correctly set up.

When the fund is audited the auditor will check that a current copy of the deed has been provided to them otherwise, you could be in breach.

If the ATO then investigates the fund they usually allow you to search for the deed.

What can I do?

If one cannot be found (and they believe you) they may request that you set up a new SMSF with all the correct documentation and transfer the funds to that SMSF.

Without a trust deed your fund is non-complying so this is probably the best result.

Do you need help managing your SMSF? Please enquire online today and one of our expert financial advisers or tax specialists will assist you with your SMSF.

Updating your SMSF trust deed

Every year and sometimes every week the government changes the rules surrounding SMSFs.

Most practitioners recommend a deed be updated at least every five years or, even better, when any significant new law is enacted.

For example, in 2007 the government introduced the Simpler Super regime allowing for different types of pensions and the ability to transition to retirement. Many old deeds did not allow members to draw funds before retirement and were based on outdated rules.

Technically, members of these funds could not enjoy the benefits of the new measures until they updated their fund to allow for the new laws.

What other changes need to be made?

Over time, trustees, directors and members may change. All these changes must be reflected in your SMSF trust documents with a definite paper trail from the setup of your fund to the present.

The SMSF trust file

It is very important that you keep a file with all of the relevant paperwork for your SMSF trust. This way, if you get audited or have to supply a regulatory body with documentation, you can do so with relative ease.

Trustees should keep a SMSF trust file containing:

  • The original trust deed.
  • Amendment to the trust deed.
  • Evidence of supplementary deeds to change name.
  • Evidence of supplementary deeds to change trustee.

Your SMSF specialist advisor can assist you with managing these obligations.

How we can help

Making sure that your SMSF is set up correctly and that your trustee complies with their obligations is essential! Please contact us or enquire online and we can ensure that your trust deed covers all bases.

Note: this website is for informational purposes only and should not be substituted for professional financial or taxation advice.