The Importance of Regularly Reviewing Your SMSF Trust Deed

A Self-Managed Superannuation Fund (SMSF) operates as a trust, governed by a set of rules outlined in its trust deed. This document is crucial as it defines what your SMSF can and cannot do, guiding its operations and ensuring compliance with the law. However, many SMSF trustees overlook the need for regular reviews and updates of their trust deeds, leading to potential issues with fund management and estate planning. 

Why Your SMSF Needs a Trust Deed 

The Role of the Trust Deed 

• Rule Book: The trust deed acts as the rule book for your SMSF, detailing permissible activities and restrictions.
• Legal Compliance: While legislation allows for certain actions within super funds, your trust deed must specifically permit these actions for them to be valid. 

Example: Binding Death Benefit Nominations 

• Legislative Allowance: Current legislation permits non-lapsing binding death benefit nominations, which ensure that death benefits are distributed according to your wishes without needing to update nominations regularly.
• Trust Deed Requirement: To implement a non-lapsing nomination, your trust deed must explicitly allow it. Older deeds might require updates every three years, making non-lapsing nominations invalid if the deed does not accommodate them. 

The Importance of Regular Reviews 

Why Regular Review is Essential 

• Avoiding Issues: Regularly reviewing your trust deed helps prevent potential issues with invalid nominations and ensures that your SMSF complies with current legislation.
• Adapting to Changes: Legislative changes can affect what is permissible within your SMSF. Regular reviews ensure that your trust deed remains up-to-date and relevant. 

Recommended Review Frequency 

• Every 5 Years: It is generally advised to review your trust deed every five years, especially when there are legislative changes to superannuation laws. 

Options for Updating Your Trust Deed 

Minor Changes 

• Deed of Variation: For minor amendments, a deed of variation can be used. This document outlines the changes and is attached to the original trust deed. 

Major Changes 

• New Deed: If significant changes are needed, a new trust deed must be established. This ensures that the updated rules and provisions are fully integrated. 

Professional Assistance 

If it has been five or more years since your last SMSF update, talk to us so we can provide a qualified lawyer experienced in SMSF trust deeds. We can provide expert guidance and ensure that your trust deed is l legally compliant and aligned with your financial goals and estate plans