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SMSFs warned on trust deed limitations with beneficiaries

SMSFs warned on trust deed limitations with beneficiaries
By Miranda Brownlee
06 July 2022 — 1 minute read

SMSF trustees have been told to check their trust deed when nominating beneficiaries as there may be very specific limitations, says a law firm.

Speaking in a recent webinar, Cooper Grace Ward Lawyers partner Clinton Jackson explained that while the Superannuation Industry (Supervision) Act (SIS Act) sets out who can be nominated as a beneficiary, there are deeds that are much more limited than what the SIS Act states.

“There are a number of deeds out there that for some reason do not draft [the limitations on beneficiaries] as widely as the SIS Act allows,” said Mr Jackson.


“For example, there are some deeds out there that only let you make a nomination in favour of dependants and not in favour of the LPR.”

Mr Jackson said SMSF professionals and their clients therefore need to read the deed and check what limitations there are.

“Make sure the person you are nominating falls within the eligible beneficiaries under your deed as well as the SIS Act,” he said.

“We still see clients who want to nominate their mother or their aunt or their cousins and all those sorts of things. We know that they fall outside of the SIS Act most of the time, but check your deed because sometimes deeds have some really unusual examples.”

Cooper Grace Ward Lawyers partner Scott Hay-Bartlem said it is also important to be aware that definition of spouse and child have evolved over the years.

“Some deeds are really narrow and really fixated, back in the early 2000s, spouses only included opposite sex couples. Interdependency relationships were only introduced in 2000 as a Democrat compromise for GST,” Mr Hay-Bartlem noted.

“So, if you've got an old deed, you may not pick up all these things and you may not realise until you blowtorch the deed.”


SMSFs warned on trust deed limitations with beneficiaries
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Miranda Brownlee

Miranda Brownlee

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: [email protected]momentummedia.com.au
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