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Trust deed history required

Trust deed history

Full documentation of an SMSF's trust deed history is required to establish the validity of any variations made to this element of the fund’s paperwork.

Advisers and their trustee clients cannot rely on having just the most recent version of the SMSF trust deed as satisfactory record-keeping and instead must establish a documented history of the fund’s existence, the partner of a legal firm has said.

Speaking at the recent SMSF Association Technical Day 2020, Cooper Grace Ward partner Clinton Jackson cited the ability to provide evidence any trust deed variations from the establishment of the SMSF had been properly executed as the reason why possessing this set of documents is necessary.

“There is one file that one of our team members has recently examined where there were eight variations and when we actually [examined them] none of the variations to that deed were valid because the first variation didn’t follow the variation power in the first deed,” Jackson said.

“So then every deed that varied that one afterwards clearly wasn’t valid because the first [change] wasn’t sufficient to vary the deed.”

He emphasised the importance for advisers and their clients to establish this historical set of records as soon as possible.

“For your client base today that is still in existence and still has money in super, one piece of homework [you should do] after this conference is to go away and make sure you have all the documents that sets up a history of the fund,” he recommended.

“So [you’ll have to get] the original deed and find every variation and every change of trust deed from day one [of the SMSF] to now.”

According to Jackson, having original documents is a preferred position, but not absolutely vital to the process.

“They don’t have to be originals. If you can’t find the originals that is fine. Copies are better than nothing, but what we really see when we are blowtorching these [documents] is often there are deeds in the chain that are missing,” he revealed.

During the same session, he warned against having clauses in SMSF trust deeds stipulating the ATO has to ratify any variation made to it.

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