SMSFs urged to review segregation clauses in trust deed

With the rules around segregation changing, SMSF trustees wanting to run separate investment portfolios for different members may need to check the current terms in their deed allow for this, says an SMSF admin firm.

Heffron SMSF Solutions head of customer Meg Heffron says while a fund’s ability to segregate its assets will change from 1 July 2017 for those with larger balances, this will not impact their ability to run different investment portfolios.

“It doesn’t change the trustee’s ability to allow members to choose specific investments to underpin their account. It just means that arrangement can’t be reflected in the fund’s tax return,” Ms Heffron said.

Many trust deeds treat segregation and member investment choice as the same thing. However, “ruling funds out of some valuable strategic planning opportunities,” she said.

“[The deed needs] to make it very clear that the two things are different and that you can run a different investment portfolio to someone else without segregating the asset.”

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