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SMSF Deed History Review

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SMSF Deed History Reviewfrom $500

All SMSF strategies and arrangements rely on a ‘firm foundation’ being the trust deed and governing rules. Like a house, unless you have a firm foundation, the house may prove shaky and be blown down by some rough weather. Similarly, there are many SMSF strategies such as pensions, binding death benefit nominations (‘BDBN’), and the determination of who eventually gets control of the fund, especially on death, separation of a relationship, and in a dispute, that places the deed as a critical foundation stone to almost every SMSF strategy or transaction. Thus, its worthwhile ensuring the fund’s governing rules provide a firm foundation to every SMSF.

Note that an SMSF’s governing rules require all prior deeds, rules, and change of trustees to be validly effected, prepared, witnessed, executed, and, if necessary, stamped, in compliance with prior variation powers, relevant consents, and appropriate legal formalities. All these formalities must have been complied with in the document trail or the fund’s governing rules may not be valid and effective.

The SMSF Deed History Review includes a review of the deed of establishment and any subsequent deeds of variation, together with any deeds of change of trustee.  We review the full deed history of the SMSF with the objective of seeing if there are any issues that require remedial work.  This remedial work is aimed at ensuring the SMSF’s deed history is as resistant to outside scrutiny or challenge as possible.  Remedying any issues in a timely manner is often far more cost and time effective than being exposed to legal challenge, ATO scrutiny, or other risks and uncertainty at a later date. Also, banks and financial institutions are very strict on seeing a full and valid document trail before they lend to an SMSF trustee or undertake certain other transactions. If any further work is recommended, we provide an estimate for this work in our report.

This review assists in minimising potential issues, for example:

  • disputes regarding  BDBNs or a planning strategy undertaken  by a trustee;
  • ATO scrutiny, audits, etc;
  • legal challenge by beneficiaries (including beneficiaries who are not members);
  • bank scrutiny, eg, when lending to the SMSF for a limited recourse borrowing arrangement; and
  • uncertainty regarding the fund’s succession planning strategies.

For some further information on the importance of having a sound SMSF deed and related documents – click on the articles listed below:

The cost of the review may assist in overcoming potentially costly and embarrassing situations. Any dispute or litigation in respect of a fund’s governing rules can cost many thousands of dollars and take years to resolve. Moreover, the money in the SMSF may go to people who the member(s) did not intend to benefit.

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