To ensure the strongest possible defence in the event of a legal challenge concerning the estate of a deceased member, every deed associated with an SMSF, from its establishment onwards, should be securely stored and maintained on file, a technical specialist has advised.
“When you take on a new client, what do you ask from the previous or current accountant? One thing that you’ll hear from all the lawyers in the SMSF space now is that whenever they look at a fund, they don’t just ask for the current deed, they ask for every single deed in the history of the fund,” Accurium senior SMSF educator Anthony Cullen noted during a recent webinar.
“The reason why they do that is they go through and check them all for validity. Each deed will have clauses in there on how you go about amending the deed.”
To emphasise his point, Cullen provided an example where a fund had supplied its original establishment deed, which had been amended at least five times, only to discover some of the documentation for these changes had been prepared incorrectly.
“You believe [you may have] the most current deed, but if you don’t get all the documents looked at, you may find the process going from amending deed two to amending deed three was not done correctly and so, therefore, it’s an invalid transfer,” he said.
“So practically we’re still dealing with trust deed two and everything after the incorrect transfer becomes invalid.
“You want to get all of the deeds stress-tested to make sure that we know exactly what document we’re dealing with and there’s no chinks in the armour, because those chinks are going to be easier to deal with while clients are still alive than what they are after they pass away.”
He noted examining the deed chain within an SMSF is crucial as trustees may have been added or removed from the fund, potentially complicating estate planning matters further.
