Documentation, Trusts

Review of deed chain essential

SMSF trust deed deed chain changes Cooper Grace Ward Nathan Rutherford

Checking the history of changes to an SMSF trust deed and ensuring they are valid is crucial to planning for the potential death of a fund member.

SMSF practitioners and trustees must ensure any variations to a trust deed are valid and can be supported with appropriate evidence as invalid changes could have significant control implications when planning for the death of a fund member, according to a legal specialist.

“The trust deed for your self-managed superannuation fund is god. If you have the latest deed and there is a break in the deed chain, the latest deed may not be the deed we’re using to make the death benefit decision. Making sure you are dealing with the right deed informs all the other advice we’re providing,” Cooper Grace Ward lawyer Nathan Rutherford told attendees at his firm’s 2024 Annual Adviser Conference in Brisbane today.

“The other reason it’s really important to have a look at the deed chain is because if we have a change in trustee along the way and there is a break in the chain, the trustee may not be the person or entity that we think it should be.

“This can be a problem, for example, if [an individual] was involved in the trust earlier and [was] removed as a trustee. If we’re stuck with an invalid change in the trust deed, [the removed trustee] may actually be the person making the decision.

“Get advice about the deed chain, this is really important. If we don’t know which deed applies, we don’t know what advice to give.”

Rutherford used a real-life scenario his firm had dealt with to demonstrate how changes made to a trust deed could make the planning process for death benefits more complex.

“The trust deed [was] set up in 1992 and [there were] variations [in the deed] in 1995 and 1999. We had a change of trustee in 2000, a variation of the deed in 2004 and then another variation in 2007,” he noted.

“We were engaged on this matter in 2014 and we picked up that the variation in 2007 was invalid. There are seven years between 2007 and 2014. If the member had died in that period, the 2007 variation is not the deed we would have been administrating, it would be the 2004 deed.

“Seven years in the superannuation world is a pretty long time and there were some changes in 2007 which really saw the need for trust deeds to be updated.

“So that’s an example of why it is really important to make sure you are having a look at the deed chain and dealing with the right trustee.”


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