FAQ: My fund is 10 years old – should I get my deed reviewed?

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If your SMSF has been around a while, you might consider reviewing your trust deed.

All SMSFs require a trust deed, which sets out the governing rules for the operation of a given fund. Along with abiding by superannuation legislation, trustees are also required to follow the rules set out in the trust deed.

However, what worked for your fund when you first established it may not be be adequate further along down the line. If you’ve had your SMSF for some time, you might consider having your deed reviewed.

Why should I have my deed reviewed?

Having been an SMSF administration service provider for more than 15 years, we at Aquila Super have seen how significantly the superannuation rules have changed over the past decade. We would therefore recommend that any fund which is 10 years old should at least have its trust deed reviewed and potentially upgraded.

What is the disadvantage of operating under an older deed?

Older deeds may not allow funds to borrow under the ‘limited recourse borrowing’ rules or pay a transition to retirement income stream for those reaching preservation age and still working. Although trustees may not want to borrow or take an income stream now, in our experience, we have found it is more efficient to have a flexible deed in place. This way, trustees can take advantage of strategy opportunities rather than having to wait until the deed is formally upgraded.

What kind of deed should I choose?

There are many different deeds available for SMSFs. They range from those that are quite restrictive to those which are more flexible and allow trustees to operate as they wish, as long as it is within the superannuation laws. The more restrictive deeds would necessitate a frequent review in the fund’s normal operations to ensure trustees are abiding by its rules. In turn, it is likely such deeds would need to be upgraded when the superannuation laws are amended, which has been fairly often in the last 10 years.

If trustees have any concerns about the content of their SMSF trust deed or are unsure whether they need an upgrade, they can contact us – we are happy to assist with a deed review.

At Aquila Super we do not require trustees to use any one particular deed. However if we believe your trust deed is too restrictive or not written with an SMSF in mind we generally recommend that it be upgraded.