Basic Information about the SMSF Trust Deed - aLittleBitOfAll
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Basic Information about the SMSF Trust Deed

Basic Information about the SMSF Trust Deed

Australians are becoming more and more interested in picking a good super strategy. As a result, SMSFs now make up one third of the total number of super funds. This is no wonder since a self managed super fund has a lot more advantages over the other heavily regulated funds. Perhaps its key attribute lies in the wide choice of investments; SMSF members can invest in residential and commercial property, direct shares, deposits and collectibles. Moreover, an SMSF is more flexible regarding the amount and timing of contributions, allocation of earnings and implementing reserves.

But before setting up your SMSF, you need to get acquainted with a legal document called the trust deed. This document is the first and most important step of the set up process because together with the government’s laws concerning supers it establishes the rules which will regulate the workings of the fund. The deed clearly states the guidelines all members must follow if they want to avoid legal problems and disputes among themselves. A trust deed illustrates what the fund’s main objectives are, regulates who can become a member and outlines whether the benefits can be paid as income streak or lump sum.

Because it’s a legal document it needs to be prepared by a person who is qualified to do so. And searching through the internet you can find numerous trust deed providers with different price range and different level or professionalism. Picking an experienced self managed super fund trust deed provider enables you to maximise the potential of your SMSF and build your retirement benefits while protecting you and your family.

While an SMSF gives members the ability to modify the regulations, the following covenants in the trust deed which cannot be avoided or changed.

  • the SMSF must act in the interest of all members
  • members need to come to a mutual agreement about all matters concerning the SMSF
  • members need to formulate a clear investment strategy
  • the assets of the fund need to be kept separated.

Although a trust deed is a strict document, it can be changed and updated if the changes are according to the SMSF rules. Members can perform necessary amendments to the fund at any time they feel it needs to be done. Most common situations that require changes of the trust deed are when a member leaves or joins the fund, when there’s a change in the investment strategy, or when members want to invest in some property or shares.

After you’ve obtained the self managed super fund trust deed, the trustees can be appointed. A trustee declaration that confirms each member understands and commits to their role needs to be signed within 21 days of the appointment. When you’re done with all of this, the last step is to register the SMSF with the ATO and start paving your way to happy and financially secure retirement days.

Stephanie Tierney