I was reading an article on SMSF Adviser which talked about administrative penalties for those Self-managed Super fund owners who have outdated SMSF trust deeds. Besides, such a situation can result in a compromised death benefit.
Various changes to the guidelines of the SMSF industry
Already, the SMSF industry has seen too many changes. They comprise of, but are not limited to, limited recourse borrowing arrangement, upper cap of insurance cover, and upper caps of concessional and non-concessional contributions.
Outdated provisions of trust deeds can hurt
Many advisers have not updated their clients’ trust deed since the introduction of Simpler Super Legislation 2007. Trustees acting on the guidance of outdated provisions can find themselves burdened with administrative penalties.
Case in point: non-lapsing death benefit nomination
The non-lapsing binding death benefit nomination is absent in most of the old SMSF trust deeds. SMSF members have got themselves three-year lapsing nomination instead in many cases and this can have adverse impact in the event of a member’s demise. In effect, this means that those members who have not gotten their trust deed updated for the last three years may be staring at an invalid nomination.
Subsequently, the surviving trustees, holding the power to disburse the death benefit of the deceased may do so quite differently from the way originally intended.
You can read the original article here.
If you desire a split Super contribution with your spouse, an old trust deed won’t help your cause. The same may be true if you wish to commence a transition-to-retirement pension. These are only a few points you need to ponder over before you convince yourself that updating your trust deed is a prerequisite. Get in touch with your adviser or administrator and keep something in excess of $500 handy. The professionals will take care of the rest.
