Recent legislative and industry updates have introduced significant changes, including increased duty and extended vesting dates for trusts, broader electronic signing capabilities for companies, and additional guidance on the classification of discretionary trusts as foreign entities. […]
SMSF Deeds for the Real World
Matt Neibling, current as of: 25 July 2019.
Why you can’t keep a good deed down
Following recent industry commentary regarding provisions in some SMSF deeds, we asked our team of super experts about the most important considerations for accountants, advisers and their clients. Without exception, they all reiterated the importance of advisers using deeds that are designed to operate effectively in the real world.
Acis Legal Services Director, Stephen Harvey, said: “A well designed SMSF deed should include provisions that cover most of the situations in which accountants and trustees find themselves.
“This is the precise reason that our deeds are designed by a national panel of industry experts, comprising specialist inhouse and SMSF lawyers, administrators, accountants and financial planners, who bring to the table their collective expertise and understanding of the full SMSF sphere.
“This multi-disciplinary approach delivers far better results for firms and their clients.”
Why Uniform Deeds are Good for Business
From a practice growth and efficiency standpoint, there is a significant benefit in utilising a widely accepted and uniform SMSF deed, according to Martin Kerrigan, CEO of leading accounting and advisory firm, Snelleman Tom.
“Dealing with multiple deed types adds significant administrative overheads to your business. So, if you want to build efficiencies into your advisory practice, you should adopt a modern, practical SMSF deed and ensure it’s the only deed you use,” Kerrigan said.
Deed Provisions Should Cater for Most Circumstances
SMSF deeds should incorporate provisions that cater for most common procedural matters. Recent examples where specific provisions apply include minimum payment requirements for pensions in SMSFR 2013/15, recently covered in Acis All Areas, and suggestions by some industry players that reversionary nominations should not override BDBNs.
“SMSF deeds need to cater for most circumstances, for example, pension payment requirements and BDBNs,” said Acis SMSF Services Director and Founder of Advisers Digest, Peter Johnson.
“In regard to recent statements made about trust deed clauses relating to BDBNs, whilst we agree with the sentiment, if a reversionary pension is auto-reversionary then your BDBN would be over a zero balance.
“If it wasn’t, then the pension clearly wasn’t auto-reversionary. It would simply be a new death benefit pension. This has TBC consequences because you would not have the 12-month grace period.
“If advisers want the BDBN to override a reversionary pension then they simply don’t take advantage of the auto-reversionary option available in the deed.”
Pro-Super Australia Managing Director, Brad Hoffman, went on to suggest that, in the case of BDBN clauses, accountants should consider the design of the deeds they are using: “Consider the case of BDBNs where every large super fund gives members the option of having one by simply completing a form, with no lawyers involved,” he said.
“An effective SMSF deed should always provide for the exceptions, but its default position should be the one which accountants, advisers and trustees will most commonly encounter. Keep the legal protections in mind, but draft it for the real world.”