SMSF Trust Deed Set Up

A Self-Managed Superannuation Fund (SMSF) is a Superannuation Trust.

An SMSF is a trust structure that provides benefits to its Members upon retirement. The main difference between an SMSF and other super funds is that the Members are also the Trustees of the fund giving them a high level of control when it comes to tailoring the fund to meet their individual needs.

1. SMSFs must have 6 or fewer members.
2. The Trustee(s) will either be individuals who are all members of the SMSF, or a Corporate Trustee whereby all Directors are members of the SMSF.
3. If there is only one member of the fund then that member plus another person unrelated to the Member will be Trustees.
4. No member can be an employee of another member - unless the two members are related.
5. For a single Member SMSF with a Corporate Trustee, either the single Member will be the Sole Director of the company or it will be a company with two directors whereby the second Director is a relative of the member only if they are the employer of the Member or a non-relative of the member if they are not their employer.
6. No trustee can receive payment from the fund for their services as trustee.

The Patricia Holdings Trust deed provides that the Nominations can be renewed every 3 years but do not have to be renewed. It also provides that there can be an agreement between the Trustee and the Members (that binds the Trustee) setting out how the members benefits are to be distributed if the member dies.

A Superannuation Trust deed should be updated whenever there is a significant change in the law. As a general rule of thumb the Trustees of a Superannuation Fund should consider reviewing the Trust deed every two years and should update at least every four years. The Funds Auditor may provide some guidance regarding this.

Patricia Holdings can help change the name of your SMSF. The Trustee elects to change the name of the Fund and then confirms that election in writing. A Trustee must ensure that if a Fund changes its name that every person who has business dealings with the Fund and every Nominated Beneficiary of the Fund are notified of the change of name. We can provide services for SMSF changes, with all the required paperwork for $187 delivered as a PDF or $220 for printed and couriered documents.

Yes, every SMSF must have a Trustee. This is because the law requires that for a Trust (an SMSF is a Trust) to exist there must firstly be some Trust property and secondly, it is the Trustee (or Trustees) who hold the Trust property on Trust for a Beneficiary or Beneficiaries (there must be a separation between the legal and equitable ownership). A Trust is not considered a legal entity.

In the case of Superannuation Trust the Superannuation Laws requires that a Superannuation Trust must have a Trustee.

All the SMSF Members must be Trustees if the Trustees are individuals (except in the case of Members who are not eligible to be Trustees i.e. minors, bankrupt, unsound mind, then an authorised representative would be appointed) and if the Trustee is a company then all of the Members must be the directors of the Trustee Company where eligible.

If there is only one member then there must be 2 Trustees if the Trustees are individuals. The Trustee who is not the member can be a relative of the member only if they are the employer of the Member or a non-relative of the member if they are not their employer.

If there is only one member and the Trustee is a company then the Trustee company can be a single member company of which the member is the sole director or it can be a two Director company whereby the second Director is a relative of the member only if they are the employer of the Member or a non-relative of the member if they are not their employer.

A Trustee winds up a Superannuation Trust by:

• making a Declaration (in writing) that the SMSF is to vest (that is the Trust ends and the Trust assets be distributed to the Beneficiaries);
• collecting in all of the Trust assets and converting them into cash (unless the Trustee proposes to make an in specie distribution);
• all debts of the SMSF must be paid and all tax must be paid;
• The assets (or cash) are then distributed amongst the Members or Members dependants according to the members share in the SMSF;
• notice is then given to the Taxation Department that the Trust has ceased to exist.

If any Member is under the age (retirement after age 55, permanent disability, death etc) when the Superannuation Trust can make payments to the Member then that particular Members share must be paid to another complying Superannuation Fund.

Under section 17 of the SIS Act (and as set out in the definitions section of the Patricia Holdings SMSF Trust deed) the Members must be the Trustees, or if the Trustee is a Company then the Directors of the Trustee Company must be the same persons as the members.

If there is only one Member of the Superannuation Fund then that Member plus another person unrelated to the Member will be Trustees, unless that second person is the employer of the member then they should be related. For a single Member SMSF with a Corporate Trustee, either the single Member will be the Sole Director of the Company or it will be a two Director company with the Member being one and an unrelated second person being the other (unless they are the employee of the Member as above).

Minors (a person under 18) cannot be Trustees or Directors of a Trustee Company. But a Legal Personal Representative of a minor can represent the minor.

Bankrupted and disqualified persons cannot be Trustees' or Directors of a Trustee Company.

Yes, members of the fund can be non-Australian residents. However, if all members of the SMSF live overseas for an extended period, it could result in significant tax implications.

Yes, a member can be considered to have a "legal disability" (excluding being under 18), provided that the legal personal representative of the disabled member is a trustee of the fund, or if the member lacks a legal personal representative, a parent or guardian of the disabled member acts as a trustee.

If the trustee is a company, the legal personal representative of the disabled member, or in the absence of one, a parent or guardian of the disabled member, must serve as a director of the company in place of the member.

You can access your super when you reach your preservation age. This is the minimum age, set by law, which your super must be preserved until and is currently between 55 and 60. Once you reach this age, you can access your super as long as you are permanently retired (or reached age 65). If you haven’t permanently retired, you can still access part of your super through a transition to retirement pension.

When the Trustees of the Superannuation Fund are individuals then payments from the SMSF to its Members must be made in the form of a pension. That restriction does not apply in the case of a Corporate Trustee. In this instance, payments can be made in lump sum or pension.

Yes, the SMSF will receive an ABN when it registers with the ATO and elects to become a regulated superannuation fund. Patricia Holdings can help with the fund's ABN, TFN, and GST registrations.

To obtain an ABN, the fund must meet the following requirements:

• Have at least one trustee
• Have a trust deed
• Have identifiable members
• Set aside assets for the benefit of its members

If the trustee is a corporate trustee then the answer is no. The Superannuation Industry Supervision Act is specific, under section 67 A & B that the Trustee must be a different legal entity. The Trustee can be an individual, a group of individuals or a Company. Directors of the Corporate Trustee of the Bare Trust can be the same as the members of the Fund.

It is in our experience that most banks will not lend to a Bare Trust with individual Trustees.

When all of the Members of an SMSF have died the assets of the SMSF must be distributed amongst the dependants of the deceased Members or paid to the personal legal representative of the deceased Members to be distributed in accordance with the Will of the deceased Members. If a SMSF Member has given the Trustee a direction in writing either in the form of a binding death benefit nomination or in some other form then the Trustee may distribute the Member's share of the fund in accordance with that direction.

Care should be taken when distributing a deceased Member's share of a SMSF because there are different taxation consequences attached to different distributions. 

Yes, the law was changed in 2008 to allow non-binding death benefit nominations, and these are permitted by the Patricia Holdings deed. A Death Benefit Nomination form will be provided with any deed purchase.