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Knowledge Details

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SMSF Deed of Variation

Are your Self Managed Superannuation Fund (SMSF) deeds updated for the new legislation?

Yes. The Constitute deeds should be flexible enough to take into account future changes in the law, but as changes occur (which is often) our lawyers then draft changes to our new deeds as quickly as they can whilst maintaining their high quality.

If you would like to upgrade your SMSF deed, you can do so by ordering a deed of variation online.

Does Constitute's SMSF deed allow for the trustees to invest in crypto currencies such as bitcoin?

Our SMSF deed does allow for an SMSF to invest in crypto currencies such as bitcoin.

Under our current deed, refer in particular to clause 11.2(c), and also to clause 11.2(n) and the first paragraph of clause 11.2 (just before paragraph (a)).

However, it should be remembered that all investments of an SMSF are subject to the applicable superannuation legislation, in particular, to the Superannuation Industry (Supervision) Act 1993 (SIS Act) and its regulations, irrespective of the provisions of the SMSF deed.

When updating an SMSF deed, is it sufficient to keep a scanned copy of the previous deed(s), or do we need to keep originals? Ideally, we would like to just keep the soft copy of the signed deed as the reality is the originals are often misplaced or lost overtime. We just don’t know if that’s good enough to just have scanned copy for various purposes (i.e. for estate planning, proving things to ATO, in case of divorce or even court disputes). What are the requirements for this?

We are not aware of any legislative or other requirement for original documents such as trust deeds to be retained, provided that a photocopy or electronic copy of the original document is retained.  However, it is possible that a third party such as a bank may require the original document, or the original document may be required in court in the event of court proceedings, and we therefore recommend that the original document (along with copies) be retained for safe-keeping. 

It is important that trust deeds are correctly signed, witnessed and dated when the trust or SMSF is established or varied, so that all copies of the deed are copies of the original signed deed.

Constitute provides a document storage area in each fund online that you are free to use to upload signed copies of the trust deeds for safe keeping. There is no fee for this service.

Are we required to keep hard copies of SMSF deeds, or is a scanned, soft copy sufficient?

We are not aware of any legislative or other requirement for original documents such as trust deeds to be retained, provided that a photocopy or electronic copy of the original document is retained.  However, it is possible that a third party such as a bank may require the original document, or the original document may be required in court in the event of court proceedings, and we therefore recommend that the original document (along with copies) be retained for safe-keeping. 

It is important that trust deeds are correctly signed, witnessed and dated when the trust or SMSF is established or varied, so that all copies of the deed are copies of the original signed deed.

Constitute provides a document storage area in each fund online that you are free to use to upload signed copies of the trust deeds for safe keeping. There is no fee for this service.

Are the binding death benefit nominations (BDBNs) provided by Constitute non-lapsing?

Yes, our BDBNs are non-lapsing (and importantly, our SMSF deed allows them to be non-lapsing).

Has the Constitute SMSF deed been updated to allow for up to six members?

Yes - it has! Refer to clause 9.2(f) of our SMSF deed in this regard.

This change came into effect on 1st July 2021.

Can you look at my SMSF deed and tell me if I need to have it amended?

No, we can't - we can only take instructions once you have decided to vary your deed. We will then effectively replace your existing deed with our latest deed. We don't review existing deeds to see if changes are necessary for individual clauses.

Does Constitute automatically update all deeds previously provided whenever the law changes for free? Or do I have to pay for a deed of variation?

Unfortunately, not at this stage, although this is a service we are working on and will offer very soon.

Currently, deed changes are not automatic, nor free. If you decide you need a new deed, you will need a deed of variation – we can provide these for online orders for $195 (if we provided you with the latest deed for the fund), otherwise it will be $275.  These prices are for the electronic service only.  An additional fee applies for the bound and delivered service. Manual orders are $350 (if we provided you with the latest deed for the fund), otherwise it will be $450, so ordering online will be most cost effective.

To update a deed, order an SMSF deed of variation online.

 

I previously ordered an SMSF from you. Since the laws have changed so much, do I now need to upgrade it?

Whilst your deed may contain some terminology which has been superseded by the new provisions, it is drawn sufficiently broadly to allow for the relevant changes to be accommodated.

However, for funds where members are looking at commencing a new pension (including a transition to retirement income stream), or moving existing allocated pensions into the new account-based pension structure, it may be worthwhile to update the deed. Our revised deed is up to date, incorporates the new superannuation terminology, and addresses some specific Simpler Super issues.

Does the deed enable future changes in SIS, etc, to be covered without alteration to the deed?

The deed contains broad compliance provisions, and is drafted so as to minimise as far as possible the need for updates to be done simply because an aspect of SIS has been amended, or additional strategies have become available under tax and superannuation law.

That is - the deed is drafted as broadly as possible, to allow (as much as possible) for future changes in the law.

Of course, there will from time to time be regulatory changes which make a deed update either desirable or necessary.

For example, if SIS were amended so that the inclusion of a certain provision which is currently contained in the trust deed would render a fund non-complying, it would be necessary to amend the deed. We cannot predict what such changes might involve, and therefore cannot ensure that our deed will continue to be appropriate in all future regulatory environments. However, experience has shown that it weathers most rounds of SIS amendments reasonably well.

Does the trust deed for the SMSF have to specifically allow for the payment of an ABP?

The trust deed for the fund must allow for the ABP to be paid.  Trust deeds drafted before mid-2007 will not expressly allow for an ABP to be paid, as the legislation in relation to ABPs was only finalised at that time.  If the existing trust deed was drafted before mid-2007, we would recommend that it now be upgraded for this reason alone (if requested, we can now arrange for the trust deed to be upgraded).

 

Does the trust deed for the SMSF have to specifically allow for the payment of a TRIS?

The trust deed for the fund must allow for the TRIS to be paid.  Trust deeds drafted before mid-2007 will not expressly allow for a TRIS to be paid, as the legislation in relation to TRISs was only finalised at that time.  If the existing trust deed was drafted before mid-2007, we would recommend that it now be upgraded for this reason alone (if requested, we can now arrange for the trust deed to be upgraded).

We are currently reviewing our clients' death nomination forms. Do you offer the service of assisting in this area, particularly if a reversionary beneficiary is nominated?

We don’t offer the service of reviewing existing binding death benefit nominations (BDBNs) as such, however we do provide BDBNs along with our Deed of Variation service (and also our SMSF establishment service).

If your concern is about preserving BDBNs that have already been made, the BDBN will continue in effect after the existing SMSF deed has been replaced with our SMSF deed, provided that the BDBN was validly made in the first place, and the nominated beneficiaries (including any reversionary beneficiaries) are “dependants” as defined in the superannuation legislation (and/or the member’s legal personal representative).

By “reversionary beneficiaries” (refer above), we mean any beneficiary nominated in a BDBN that is only to receive the member’s benefits in the event that the first nominated beneficiary should predecease the member.

If an existing SMSF deed is to be upgraded by us, and a member of that SMSF has already made a BDBN, it may be simplest for that member to use the BDBN forms that we provide to make a new BDBN, which would have the effect of revoking any existing BDBN.  Note in this regard that the BDBNs that we provide include clear instructions as to how the BDBN is to be signed and witnessed, as well as who may receive the benefits (i.e., who is a “dependant”).  Our BDBN forms also allow for reversionary beneficiaries (as well as primary beneficiaries) to be nominated.

Alternatively, any existing BDBNs can be retained by the member along with other documents in relation to the SMSF.  As stated above, an existing valid BDBN will continue to be legally effective after the SMSF deed has been upgraded by us.

Click here to login and update your SMSF deed (and receive new BDBNs).

Can the role of principal employer be removed from an SMSF deed?

If the variation clause in the current SMSF trust deed provides that the approval of the Principal Employer is required to vary the trust deed, then they will need to be involved to update the deed and will then have no further role.

This means that the principal employer (often a company) should be a party to the variation documents that we prepare, even if that company does not now have any involvement with the fund.

Note that, apart from being a party to the variation documents that we are to prepare, the Principal Employer does not have to have any further involvement with the fund.

Therefore, in order to update the deed and subsequently remove the principal employer from any further role in the fund, please provide the details of the principal employer in the Other Parties tab on the online deed of variation form.