Your SMSF At present there are a number of new rules around your self-managed super fund (SMSF). Below are two issues you need to make sure you are on top off.
Update the trust deed When was the last time you updated your trust deed? If it was prior to 2007 then you need to act now.
What your SMSF can do is governed by two things, first is the SIS ACT, which provides the legislation around SMSF. The second is the trust deed. This means that even though the SIS ACT allows your SMSF to do something it is not a guarantee that the trust deed will.
For example, a Transition to Retirement pension may be allowed in the SIS ACT but is it allowed in your Trust Deed. Same goes for purchasing real property or shares.
It is important to make sure that you read your trust deed regularly and especially before you undertake and changes in the SMSF. You need to make sure that the Trust Deed allows such actions. It is best to update your trust deed regularly and make sure it complies with all of the new standards under the SIS ACT.
Does your SMSF have an Investments Strategy?
The investment strategy is the document, which provides guidance to the trustees and your advisors on how the SMSF can invest.
The investments strategy should be specific as opposed to a vague and wide reaching statement. The more specific the investment strategy is the better understanding your advisor and the trustees have of what risks you are prepared to take.
The investment strategy should detail what type of investments you are comfortable to hold being shares, hybrid, cash, term deposits, warrants, options, property in trust or direct property.
It should also provide guidance as to if the funds are comfortable holding geared investments. One of the big changes as at 01/07/2012 is that the investment strategy should also include an insurance strategy.
An insurance strategy out lines what level of insurance the members of the fund should maintain within the fund. Insurance is widely over looked in SMSF with only 30% of SMSF having any insurance at all. I suspect this is mainly due to the fact that most people who have SMSF are older as it takes time to accumulate the level of wealth needed before a SMSF is a viable option
Older members may have no need for Life and TPD insurance, this is fine but it need to be included in the investment strategy to make sure that the trustees, members and advisers are aware of the minimum insurance requirements in the fund and to display that insurance has in fact been considered.
SMSF are cost effective, provide you with more control over your future and can if invested properly provide you a better return over the long run. It is however important to make sure that your SMSF is up to date.
If you have not looked at your trust deed or investment strategy since setting up the fund I would recommend that you find an hour to do so.
For more information please contact us on 07 4771 4577.