Trust Deeds

I recently went to an SMSF Seminar where trust deeds were discussed and I would like to share what I heard with you.

Your trust deed needs to prepare you for anything, an Armageddon plan if you will. Don’t think that it won’t happen.

Everyone needs to read the trust deed to check if they have been executed correctly – that they have been signed and dated correctly.

A trust deed is the ‘rules’ that an SMSF must abide by.

If your trust deed was prepared prior to 2007, it may be necessary to amend it.

If I asked you to give me your trust deed today would you be able to find it? Would it be covered in dust? Are the pages covered with coffee/tea stains? Are there pages missing?

Have you ever read the trust deed? Do you know what you can and can’t do?

The three most important things that I learnt at the seminar was the following:

1.  Read the deed;
2.  Read the deed;
3.  Read the deed.

Can you see the trend?  Let’s have a look at a typical trust deed.

Eligibility for Membership

The Trustee may in its absolute discretion admit a person as a Member Provided:
(i)    no Member shall be an employee of another Member unless those Members are related;
(ii)    at any time, the Fund shall have no greater than 5 Members;
(iii)    a person over the age of 18 may be a Member of the Fund, unless that person is a disqualified person;
(iv)    that person has provided the Trustee with an application form and has agreed to be bound by this Deed;
(v)    admission of that person as a Member would not cause the Fund not to be a Complying Superannuation Fund; and
(vi)    the person is eligible to act and accept appointment as a Trustee.

What did you think about the typical Eligibility for membership? What happens if your child is 17 years old and you want to include them in your SMSF, according to the above trust deed extract you would not be able to. Therefore, you will need to amend your trust deed before you can have them as a member of the superannuation fund.

This then reinforces the three most important things that you must remember:

1.  Read the deed;
2.  Read the deed;
3.  Read the deed.

Again if you need any help with your trust deed give us a call on 6267 2200 or contact us via email at optimapartners.com.au

ZOI YANNAKIS

SMSF Accountant