SMSF Trustee, Member and Deed Update

 

Upgrade your SMSF deed. Protect the decisions that matter.

An SMSF deed can look current and still fail where it matters. Even a newly signed deed can have a death benefit form that conflicts with its own rules, contribution restrictions that have fallen behind the law, or unclear powers for pensions. The weakness often surfaces only when a family member challenges a payment or an auditor asks what the trustee was authorised to do.

The Legal Consolidated Everything SMSF deed upgrade improves the deed of your existing fund. Your fund continues. Our tax and superannuation lawyers draft the deed and supporting documents with current legislation, ATO guidance and court decisions in mind.

What do you get?

• Take control of where your super goes when you die. Your non-lapsing Death Benefit Agreement directs the trustee to pay the eligible people you choose. We draft the agreement and deed to work together, so a mismatch between the two does not undermine your wishes.
• Put the right people on the record. Confirm the current trustee and members, or document who joins, retires or leaves. The paperwork shows who had authority to make decisions for the fund.
• Make ‘nobody told me’ harder to claim. The Product Disclosure Statement puts a member’s rights and the fund’s risks in writing. Give it to the member and keep evidence that you did. That record matters if a relationship later breaks down.
• Give your accountant and auditor proof of the decisions made. Trustee minutes record what was approved and when. They give your advisers a clear file and help the trustee answer questions from the ATO.
• Put a solicitor’s certificate in front of the bank. The Solicitor’s Bank Compliance Certificate gives a lender legal confirmation about the fund and its powers on Legal Consolidated letterhead.
• Know who drafted your documents. Our signed law firm letter identifies Legal Consolidated as their author. It tells you how to sign and use them, and puts the firm responsible for the drafting on the record.

Checklist: mistakes hiding in SMSF deeds, including new deeds

A recent signature is no assurance that the deed and its forms work together. Check for these weaknesses:

Death benefits and control

1. A death benefit direction that expires after three years when the deed could support a non-lapsing direction.
2. A nomination form that describes the recipient differently from the deed.
3. No clear relationship between a death benefit direction and a reversionary pension that continues after death.
4. Records that fail to show who joined, retired or left as trustee or member.
5. Unclear decision-making when a trustee dies, loses capacity or appoints an attorney.

Contributions and investments

6. Old age restrictions that cause the trustee to reject a contribution it is allowed to accept. The rules for claiming a personal tax deduction still need separate attention.
7. No clear power to reject a contribution the fund must not accept.
8. No clear process to return a contribution that must be refunded.
9. Weak powers for dealing with excess non-concessional contributions or a transfer balance problem.
10. Investment wording that leaves newer assets, including corporate collective investment vehicles and cryptocurrency, in doubt. The trustee also needs a sound SMSF investment strategy.

Pensions

11. No express power to start and pay an account-based pension.
12. Unclear rules for minimum payments, commutations and payments after the pensioner dies.
13. No clear process to move a pension interest back to accumulation.
14. Confusion between pension and accumulation interests, including how assets are segregated.
15. Transition to retirement rules that fail to address starting, continuing and ending the income stream.
16. An amendment that overlooks existing pensions and legacy rights.

Your accountant and financial planner help shape the strategy. The deed gives the trustee the legal machinery to carry it out.

A daughter challenged her father’s SMSF death benefit

Mr Sodhy and his de facto partner, Ms Murray, were members and directors of their SMSF. Their deed directed the trustee to pay the first to die’s entire super balance to the survivor. When Mr Sodhy died, his daughter, Ms Hill, challenged the direction. She argued that it lacked the required witnesses and had expired after three years.

The dispute reached the High Court. Ms Hill’s argument failed: those witness and three-year expiry requirements did not apply to SMSFs. The deed-based direction stood up to the challenge in Hill v Zuda Pty Ltd [2022] HCA 21. The case shows what carefully designed death benefit machinery can achieve.

Another family encountered the opposite result. Mr Munro wanted his super paid to his estate. His form named the ‘Trustee of Deceased Estate’, but his deed required the ‘legal personal representative’. The Supreme Court of Queensland held that the nomination did not bind the trustee in Munro v Munro [2015] QSC 61. Words that sounded close did not do the same legal job. That is why we draft the Legal Consolidated deed and Death Benefit Agreement to speak the same language.

Starting or already drawing a pension?

Your accountant and financial planner help decide when to draw your super and how payments fit your retirement plan. The trustee needs the legal powers to put that plan into effect. The Legal Consolidated deed sets out the machinery for account-based pensions, minimum payments, commutations and what happens when a pensioner dies.

An existing pension deserves equal care. The upgrade is drafted to carry existing pension and member interests forward while improving the deed, rather than treating every member as though they were starting again.

Who controls an SMSF with a company trustee?

With a corporate trustee, the company is the trustee and the members serve as its directors. Mum and Dad can each hold two roles: director of the company and member of the fund. When somebody joins, retires or dies, the records need to show who holds each role.

This upgrade confirms the current trustee and members or documents the change. It also caters for funds with individual trustees. If you need a company to act as trustee, see our special purpose SMSF trustee company.

How do you build the upgrade?

Start building online with the fund’s original deed and its current trustee and member details. The hints beside the questions show you where to find the information and how to enter it.

The building screen helps you identify the fund’s name and answer the question correctly.

Review your answers, build the documents and follow the law firm letter’s signing instructions. Keep the signed documents with your SMSF records and give copies to your accountant and auditor. If you need help while building, call Legal Consolidated on 1800 141 612.

Buy your deed from the law firm that writes it

Legal Consolidated is a national tax and superannuation specialty law firm. We author the deed and supporting documents sold on our website, and our signed letter identifies the firm behind the drafting. When your banker, auditor or family asks who wrote the rules governing your super, you have an answer on law firm letterhead. Learn why the identity of the document’s author matters.

Start building your Legal Consolidated SMSF deed upgrade.