Trust Deed Updates
What is a Trust Deed?
An SMSF is a Trust. All trusts must have rules by which they operate. These rules are written in a document – Trust Deeds.
The Trustees are not allowed to break any of the rules of the SMSF. SMSF’s will lose their complying status and therefore its concessional tax status if the Trustees are acting outside of the rules of the Trust Deed.
Why are they important?
Trust Deeds can impose greater restrictions on the Trust than legislation, but it can not overturn legislation as the minimum requirement. That means the Trust Deed can be stricter on the Trust than the Government is, but can’t create rules that make the government rules invalid.
Why should you keep your Trust Deed updated?
From time to time the Government will make changes to Superannuation law (The SIS Act). For example, recent, changes have allowed borrowing under special circumstances. It is possible that old Trust Deeds may have clause/s that prohibited borrowing. If the Trustee decided to undertake a borrowing strategy in the SMSF, the Trust Deed would make it impossible to complete any borrowing arrangements.
There is an easy way to update your current Trust Deed
Supervision have been able to give our clients a simple way of updating their deeds without the need for expensive reviews. If you are a Supervision client, we have all of your details so completing the form will be extremely quick. If you are not a Supervision client, the process is still fast but you will have to answer a few more questions, so have your existing SMSF Trust Deeds handy.