SMSF Association provides trust deed review assistance

The SMSF Association has made a white label document available to its members to assist them in the review of trust deeds in light of the super reforms introduced on 1 July, particularly to address benefit payments and estate planning.

In releasing the document the professional body communicated to members: “It is vital that your SMSF clients’ trust deeds have been reviewed with a consideration that they comply with new approaches and strategies as a result of the latest super laws.”

It continued: “Since 1 July 2017, there are many new approaches and SMSF strategies that differ from what was in place previously. It is essential that your clients’ deeds are not restrictive especially in the areas of paying death benefits, reversionary pensions and transition to retirement income streams.”

In regard to death benefit payments the document covers issues such as whether the deed allows for binding death benefit nominations (BDBN) to be put in place, stipulates a BDBN lapses after three years, and details any resolutions in case there is a conflict between a reversionary pension and a BDBN and which takes precedence in those situations.

On the subject of pensions the association resource alerts practitioners to determine if the trust deed allows commutations to be made to the accumulation account of a fund, has any specific provisions regarding the transfer balance cap, and contains provisions stipulating where commutations must be sourced from first.

In addressing reversionary pensions the document encourages advisers to consider if the trust deed allows a reversionary pension to be added to an existing pension and if it should automatically ensure a pension is reversionary, enabling it to be paid to a surviving spouse.

Finally in reference to transition-to-retirement income streams (TRIS) the association suggests practitioners review whether the trust deed allows a TRIS to automatically convert to an account-based pension when a nil condition of release has been satisfied, and if an allowance has been made for the 10 per cent maximum benefit payment to fall away once a condition of release has been met.

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