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Self Managed Super Fund Trust Deed
One of the first things that is needed for your self managed superannuation fund is a trust deed. A trust deed is a legal document that sets out the rules for establishing and operating your self managed super fund. It details the powers, duties and responsibilities of the fund’s trustees, and the rights of the members. There are a variety of trust deeds in the market and we strongly advise that for an SMSF trust deed you gain the advice of one of our SMSF Specialist Advisors TM.
As an SMSF firm we can help you organise an SMSF trust deed for your fund, and as it’s a legal document, we ensure that it is professionally produced. Our SMSF trust deeds are considered to be some of the best in the industry and are regularly updated. Our SMSF Specialist AdvisorsTM attend frequent workshops provided by our specialist SMSF legal firm to ensure we are at the top of our game with regards to legislation and strategies.
The SMSF trust deed covers areas such as:
- The fund’s objectives
- Who the trustees are
- Who can be a trustee
- How trustees are appointed or removed
- Who can be a member
- When contributions can be made
- How benefits can be paid (pension or lump sum) within SISA requirements
- When benefits can be paid
- How to appoint professional advisers (such as an auditor)
- The procedures for winding up the fund.
With recent and frequent changes to the self managed super fund rules it is important that your trust deed also reflects these. Our service can also provide you with an automatic SMSF trust deed update. Speak with Andrew Frith for more information about our self managed super fund trust deed.
Read Below An In-Depth Comparison & FAQs of
Corporate Trust Deeds vs. Individual SMSF Trust Deeds:
The decision to set up a self-managed super fund (SMSF) is an important one, as it provides you with a means to save for retirement and take control of your financial future. However, once you have chosen to create an SMSF, you’re faced with another critical decision: should you structure it as a corporate trust deed or as an individual trust deed?
SMSF Corporate Trust Deed vs. Individual Trust Deed
In the context of SMSFs, the terms ‘corporate trust deed’ and ‘individual trust deed’ refer to the types of trustees managing the fund.
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Corporate Trust Deed
A corporate trust deed refers to an SMSF where a company acts as the trustee, with each member of the fund being a director of that company.
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Individual Trust Deed
On the other hand, an individual trust deed is an SMSF where the members of the fund are the trustees.
The Key Differences:
1. Cost:
Setting up a corporate trustee structure generally costs more than establishing an individual trustee structure due to the additional costs of creating a company. However, the long-term benefits may outweigh the initial expense.
2. Succession planning:
The corporate trustee structure is typically more straightforward for succession planning. If a member leaves or joins the fund, the company remains as the trustee, ensuring continuity. Conversely, with an individual trustee structure, changes in membership may require the legal ownership of fund assets to be updated, resulting in potential administrative difficulties and costs.
3. Liability:
In case of a legal dispute or if the SMSF becomes insolvent, a corporate trustee provides better protection. Members’ personal assets are generally protected because the company, as a separate legal entity, is the trustee. For an individual trustee structure, each trustee is personally liable.
4. Borrowing and Lending:
Some lenders prefer corporate trustees because of their limited liability and perpetual succession. It simplifies the borrowing process, making it easier for SMSFs to enter into a ‘Limited Recourse Borrowing Arrangement’ (LRBA).
5. Penalties:
Penalties for non-compliance with super laws apply per trustee. If your SMSF has individual trustees, each trustee gets a separate penalty. In contrast, for a corporate trustee, only one penalty applies, as the company is considered a single entity and the directors are jointly and severally liable for the penalty.
Conclusion
The choice between a corporate trust deed and an individual trust deed depends largely on your specific circumstances, your plans for the SMSF, and the level of responsibility and control you wish to have. It’s always wise to seek professional advice to ensure your SMSF structure is suitable for your needs and objectives.
FAQ’s
Q: What happens when a member of an individual trustee SMSF dies?
A: When a member of an SMSF with two individual trustees dies, the surviving members must appoint a new trustee. This can often create complications and disruptions, particularly if the deceased was a key decision-maker.
Q: Can I change from an individual trustee structure to a corporate trustee structure?
A: Yes, it is possible to change the trustee structure from an individual to a corporate setup. It will involve some administrative work and possibly additional costs, but could be beneficial in the long run.
Q: Are there any disadvantages to having a corporate trustee?
A: Besides the additional set-up costs and ongoing ASIC fees, one potential downside is that all members must be directors of the trustee company, which could be an issue if a member does not want this responsibility.
Q: Can an SMSF have a combination of individual and corporate trustees?
A: No, an SMSF must either have all members as individual trustees or a company as the corporate trustee. Mixing is not allowed under the Superannuation Industry (Supervision) Act 1993.
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