DBA is recognised as one of the leading law firms offering SMSF deeds and related services throughout Australia. Below is a brief summary of the advantages of DBA’s SMSF deed package:
|DBA||Other Deed Suppliers|
|SMSFs, taxation and succession planning is DBA’s core business. Each SMSF is checked by a lawyer and DBA’s documents are prepared by experts. DBA is one of the largest SMSF law firms in Australia dealing with SMSF issues on an ongoing basis. DBA documents are subject to regular review and revision by our taxation & superannuation lawyers. The deed also undergoes external lawyer review every year.||Other suppliers, typically shelf company suppliers, use lawyers without much experience in SMSFs, let alone tax and succession planning, to review their deeds every couple of years. They may claim they have a template deed from a lawyer which often has been varied without any lawyer sign-off. Invariably the deeds are put together by clerical staff without any significant lawyer review. These suppliers generally only supply documents and do not offer advice or technical support.|
|DBA prepares each deed with the client’s personalised details from its latest precedent, which is revised on a regular basis. The deed is very flexible and comes with a range of related documents, including a comprehensive PDS.||Other suppliers typically use an old deed (reviewed some years ago) and attach only a schedule with client details. Many other suppliers do not even provide a PDS or other practical forms. An SMSF can suffer substantial penalties unless it issues a PDS.|
|DBA offers flexibility to provide a mix of benefits including a lump sum, a pension ('income stream'), disability (temporary and permanent) and range of other benefits. DBA’s deed allows members to take a mixture of this range of benefits, say, for instance, a member may want a 50% lump sum and 50% allocated pension benefit.||Some deeds only allow a lump sum or a pension benefit but not both. Many deeds that allow both a lump sum and pension benefit probably do not allow a mixture. Some deeds have pensions that do not comply with current legislation or have limited flexibility as they may not allow, eg, a reversionary pension upon death or internal roll-overs.|
|DBA’s Binding Death Benefit Nomination ('BDBN') can last indefinitely and can be drafted to provide considerable certainty. We have expert lawyers in superannuation and estate planning who can prepare a BDBN, Will and estate plan in view of the client’s particular circumstances. Preparing a BDBN without regard to the consequences for the member’s Will and estate plan can give rise to risks.||Most other SMSF deeds only allow a BDBN to last for a maximum of three years at which time they automatically expire. Furthermore, these deeds also require ongoing annual administration and reporting for the BDBN to remain compliant. DBA is also aware of a number of suppliers' BDBN powers that are so vague that they are void for uncertainty.|
|There are potentially numerous inaccurate or risky instructions received in setting up a SMSF. DBA provides feedback if it detects any issues. Obtaining proper instructions is critical to the proper establishment of any SMSF.||Deeds are generally prepared on the basis of instructions provided (rubbish in – rubbish out!). Unless the deed supplier has skilled lawyers, serious penalties can be imposed, eg, if the trustee-member rules are breached. There are many risks with varying an SMSF deed unless lawyers with superannuation expertise are used.|
|DBA provides SMSF, tax, business and succession planning services and training. DBA is able to deliver this service at a competitive cost as it is the leading SMSF law firm in Australia.||The law in relation to SMSFs is now such a complex and continually changing field that accessing documents or services from a supplier who does not have the requisite expertise is dangerous. Other suppliers invariably compete on cost and sacrifice quality and service.|
DBA’s Quality Control and Continual Improvement
DBA is committed to providing superior service and quality presentation. Our products are reviewed to keep up to date with ongoing changes to the law.
DBA has numerous QC checks in preparation of its documentation, including:
- The instruction forms, documentation and preparation of documents are checked and reviewed by lawyers and experienced legal executives. DBA seeks clarification on any issues that are detected in the preparation of documentation. Our systems incorporate numerous reviews and system checks to detect errors and enable us to produce accurate and quality documentation.
- An ASIC check of each company’s details is undertaken to ensure the company is still registered and the correct name and ACN is used. At times we receive orders with companies that have already been wound-up or have other legal issues.
- Our clients are notified of the need to have their deeds reviewed and are entitled to receive our newsletter by email highlighting recent SMSF developments.
Superannuation Upgrades and Deeds of Variation
In view of ongoing changes, it should be noted that deeds do not last forever. DBA has drafted its documentation with possible future changes in mind. In fact, there are many DBA SMSF deeds that have lasted over 10 years before requiring an upgrade. However, changes impacting SMSFs are now occurring on an ongoing basis.
DBA therefore provides a deed upgrade (deed of variation) service. Again, these documents are prepared by experienced lawyers, having regard to the prior deed relating to each SMSF. DBA can also look at the whole prior document trail to ensure its effectiveness if there have been any amendments to the establishing deed. DBA considers the amendment of a deed a task best undertaken by a skilled lawyer. Otherwise, significant tax, stamp duty and legal issues can arise.
DBA have come across numerous problems from deed upgrades undertaken by other suppliers that have been incompetently handled. The typical problems encountered include:
- an SMSF has obtained a stamp duty exemption on the transfer of dutiable property to the fund provided certain clauses in the deed were inserted. However, the person varying the deed replaced the deed without retaining the specific stamp duty clauses and a substantial stamp duty liability arose from the variation;
- a binding death benefit nomination that was drafted to ensure that a member’s death benefit was paid to his children, rather than to his second spouse, was void as the variation did not have the employer’s consent as required by the variation clause in the prior deed;
- a defined benefit pension (‘DBP’) strategy designed to obtain RBL compression was not effective as the ATO discovered the deed was lacking sufficient power to pay that type of pension. The Superannuation Industry (Supervision) Regulations 1994 (Cth) (‘SISR’) are quite prescriptive as to what must be included in the governing rules of a fund;
- the ATO consider that any amendment to a term or condition of a DBP creates a new pension with a revised RBL determination (reflecting the current market value of the assets supporting that pension). The SISR prohibits the commencement of a DBP in an SMSF after 31 December 2005 and care must be taken not to impact any term or condition of a DBP when undertaking a variation. There are many deed suppliers who simply delete all prior deed provisions (including any DBP provisions) and install a new deed template. This course is likely to give rise to a change of the terms and conditions of any DBP and, in the ATO’s view, result in the commencement of a new pension (which cannot be a DBP after 31 December 2005 in a SMSF) thereby giving rise to an RBL reassessment;
- DBPs commenced prior to 20 September 2004 may have benefited from 100% assets test exemption for social security purposes. Care must also be taken to ensure that a variation does not jeopardise this favourable status; and
- an incorrectly performed variation which is invalid will result in any strategy undertaken by the trustees on the basis of that deed (eg, reserving) being invalid.