Why is it important to keep your Trust Deed up to date
A trust deed is a legal document that sets out the rules for establishing and operating your fund. It will usually set out such things as the fund’s objectives, who can be a member and a beneficiary and how the benefits can be paid e.g. via lump sum or income stream. The trust deed and super laws together form the fund’s governing rules.
As a trust deed is a legal document it must be prepared by someone qualified such as a business lawyer, signed and dated by all trustees, properly executed according to state or territory laws and regularly reviewed and amended as required.
Trust Deeds should be reviewed and updated when there are significant legislation changes or when your circumstances change.
With a number of changes to superannuation, it’s essential that your SMSF has a robust and good quality trust deed which is reviewed regularly. In the past 15 to 20 years there have been the following major changes affecting SMSF’s:
- 1999 – Excluded Funds’ became ‘Self-Managed Super Funds’, preservation & in-house assets
- 2007 – “Simpler Super” reforms
- 2017 – “Sustainable Super” reforms
Older trust deeds may lack or exclude a number of important factors such as:
- Ability to internally roll back pensions to accumulation phase
- Segregation of assets between accumulation and pension phase
- Contribution splitting
- Dispute Resolution
- Ability to accept and refund contributions
- Specify guardians for incapacity and death
- Identify the Power of Attorney when living overseas for more than 2 years
- Allow reversionary beneficiary nominations and
- Removal of unnecessary parties to the SMSF
You need to consider if any of the above changes impact your current or future circumstances. With an older trust deed, the trustee may not be able to operate in a way that it wishes without being in breach of trust.
It pays to stay on top of any legislation changes and seek advice from an expert to ensure that your trust deed is thoroughly reviewed and amended when required.