Changing SMSF Trustee’s with Cleardocs

Danni Kirwan Marketing Executive

Last year, Cleardocs launched our Change of SMSF Trustee product, enabling our customers to change the trustee(s) of their Self Managed Superannuation Funds (SMSF’s). The Change of Trustee can be used to:

• replace individual trustees with a corporate trustee
• replace a corporate trustee with individual trustees
• remove trustees
• retire trustees
• add trustees

By the way, if you are interested in changing trustees of another type of trust — discretionary (family), unit, or hybrid — then see our earlier blog Careful about changing a Discretionary Trust, Hybrid Trust — even just changing trustee

Why change SMSF Trustee’s?

Many SMSF’s are making the decision to change to a corporate trustee to enable easier administration — particularly, in the circumstances of admitting or removing trustees, or the death of a trustee. Also a corporate trustee can enable a fund to operate with an individual as both the sole member and sole director of the corporate trustee.

In addition to these reasons, the recent popularity of SMSF borrowing has seen an increase in SMSF trustees changing from individuals to corporations – at the request of some of the banks.

If you’re changing from individuals to a corporate trustee, then you’ll need to have registered a company first as the ACN number is required to complete the Change of Trustee documents. You can register a special purpose company with Cleardocs for $537.50.

Although changing from individual to corporate trustees is popular, many SMSF’s also have reason to add or remove individual trustees. SMSF’s can operate for decades, so it’s reasonable to expect some changes to occur within that time that may affect the trustee(s) of the fund. Some basic examples include removing a trustee in the case of a marriage breakdown, or adding a trustee when parents add their children to their fund.

Get advice first

Regardless of the reason for the change, it is important:

· to get professional advice about your situation before deciding what to do; and

· to record any change of trustee(s) appropriately so that the SMSF’s documents accurately reflects the current situation of the SMSF.

Removing a trustee? Not without their signature...

Although the Change of SMSF Trustee documents can be used to remove or retire trustees, it is important to note that the documents require the signature of the outgoing trustee – so the documents cannot be used:

· to remove a trustee without their participation; or

· to remove a trustee who has died — in the case of a deceased trustee, we can refer you to our legal helpline at Maddocks for the appropriate documents.

Using the Cleardocs Change of SMSF Trustee

In order to remove a trustee, the SMSF must first have a Cleardocs deed. If the SMSF doesn’t currently have a Cleardocs deed, then you can update to a Cleardocs SMSF deed for $99. This ensures that our Change of Trustee documents are suitable to use with the SMSF deed.

To find out more about our Change of SMSF Trustee package, click here to go to the product page.

Continual vigilance

Lisa Galbraith, CEO

I have been reading with interest the articles on the ATO cracking down on DIY super funds doing the wrong thing. While the numbers involved are still small (99 made non compliant in 2009) it is significantly higher than the 24 in the previous year. It certainly makes you think.

The ATO provides quite a lot of information about trustee responsibilities – in fact when you establish an SMSF the trustee signs an ATO declaration form

This ATO form clearly states that the sole purpose of the SMSF is “providing benefits to its members upon their retirement (or attainment of a certain age) or their beneficiaries if a member dies”. The form also has a handy list of investment restrictions. Clearly stating the “I am prohibited from . . . having more than 5% of the fund’s total assets at anytime of the year as loans to, or investments in related parties of the fund...” (There are lots of others).

At Cleardocs, as well providing the ATO form, we also provide a document package that includes:

· The important do’s and don’ts for trustees; and

· Your responsibility as a trustee

This second document in particular tries to highlight a trustee’s core obligations to the fund, and includes items such as the record keeping requirements, the importance of the investment strategy, and the trustee’s ongoing obligations to the members.

The ATO website also provides regular updates on their views and approaches to SMSF and is definitely worth bookmarking in your favourites. Your accountant or planner should also be a valuable source of information for you.

Given the cost of being declared non compliant, the impact it will have on your retirement funds and the ATO’s dramatic increased focus on compliance it certainly pays to manage your SMSF properly.

Self Managed Superannuation – With Greater Control Comes Greater Risk

Danni Kirwan, Marketing Executive

The poor performance of retail super funds since the start of the GFC has seen many investors make the move to Self Managed Superannuation Funds (SMSF’s).

Statistics released by APRA show that as of June this year, there were approximately 410,000 SMSF’s in Australia – an increase of 27,000 on the previous year alone. Over the same period, SMSF assets increased by $2bn while assets in retail super funds dropped by 9% to $306bn.

While many investors make the move to an SMSF to gain greater control over how their money is invested and managed, it is vital that they realise that this also translates into a greater risk to their investment.

Here are some things that you should consider when deciding whether an SMSF is right for you:


Your responsibilities as an SMSF Trustee

First and foremost, as the trustee of an SMSF it’s your responsibility to ensure that the money of the fund is invested appropriately. Being the trustee of an SMSF carries a number of responsibilities – so if your fund has more than one trustee make sure that the others are people that you can trust. A Self Managed Super Fund won’t be able to claim compensation under superannuation law if fraud or theft occurs within the fund.

As a trustee, it’s also your responsibility to ensure that your fund is administered properly. Although Cleardocs offers you a legally sound and cost effective way to establish your fund, there is ongoing work required to ensure that your fund remains compliant in the ATO’s eyes. If your fund is deemed to be non-complying by the ATO, then you could end up losing up to 40% of your superannuation assets. Even if you seek professional advice, as a trustee you are still responsible for any mistakes made in the management of your fund.

If you do decide to get professional assistance in devising your investment strategy, or administering your fund, then make sure that your adviser is licensed to give you investment advice. This requires them to be “RG146 compliant”. RG146 refers to the minimum training requirements put in place by ASIC for anyone who provides financial product advice.


Where to find out more

Although operating your own SMSF can be complex at times, it’s also a great way to maintain control over your own money – and in turn, your retirement. Careful planning and management of your fund will help to ensure that your fund remains compliant – a key factor in this regard is ensuring that you stay abreast of changes in superannuation law.

On the Cleardocs website you will find a wealth of ClearLaw articles written by our lawyers at Maddocks focusing on issues relating to SMSF’s. You can also update your SMSF deed with Cleardocs for just $99 – ensuring your deed complies with the most recent law.

You can also find information and helpful tips for SMSF trustees on ASIC’s “FIDO” website, here.