The Guide to SMSF Trust Deeds and Strategies

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The SMSF Trust Deed is crucial to the success and longevity of any fund, yet so few trustees and, for that matter, their accountants, advisers and auditors take the matter seriously. For such a small outlay to upgrade a SMSF trust deed to the best in the market, you would think it would be a good idea to switch deeds and governing rules every two or so years. We do with our phones and should also do so with our SMSF trust deeds.

From a legal point of view, the Commissioner of Taxation requires that Trustees ensure that the fund’s trust deed is current and for the benefit of all members. In addition, SMSF audit standards require the auditor of a SMSF to check transactions such as contributions, pension payments, death benets and investments against the Fund’s trust deed. 

The danger of a SMSF trustee or any other person breaching the rules in a trust deed was seen in Dunstone v Irving [2000] VSC 488, where one of the Trustees and the Fund’s bank failed to pay out a member’s retirement benefits. The breach was a costly one for the fund, with the Victorian Supreme Court awarding more than $250,000 in damages to the retiring member against the remaining trustee of the Fund. In my view, the bank in question was lucky not to get targeted as the recovery section in the SISA applies to all persons, professionals, institutions and entities that are involved in the breach. From a lawyer’s perspective the motto is “sue one- sue all” and they would have been first in my firing line. 

To discover why the rules that govern a fund deed are so important and how to make sure you have the best foundation as possible, we need to consider the following:

1. Is a SMSF a trust or some other entity and does it need to be documented?
2. What are some of the key features that should be covered by the trust deed?
3. How does the trust deed t in with the Superannuation Industry Supervision Act 1993(SISA)?
4. How to review a SMSF trust deed
5. How does a trustee know that the trust deed meets their needs?
6. Can the trust deed be upgraded without tax or other consequences?
7. The ten “must have” 2022 strategies to be found in the Abbott & Mourly SMSF deed used by LightYear Docs
8. Why a Corporate Trustee is a must rather than individual trustees
9. SMSF Deed review checklist for advisers

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