Upgrading your Trust Deed

It is a common occurrence for trust deeds to be upgraded. Many changes have occurred in recent years including member and trustee requirements and the new in house asset rules. Furthermore many of the deeds that we have reviewed over the years do not allow the trustees to implement even simple strategies let alone the more complex strategies such as reserving and effective estate planning. However the most important change that has occurred in the last year or so is the product disclosure requirements for a SMSF. The rules apply to financial products in general however in relation to a SMSF the responsibility to issue a product disclosure statement (PDS) primarily rests with the trustee.

If you have established funds for your clients using the old Glenister & Co Alliance trust deed, the deed will continue to allow the strategies that we discuss in our journal. However you may choose to upgrade your clients' deeds to the latest version of the Glenister & Co Alliance deed, compliance documentation and product disclosure statement. We will shortly be implementing a simple, cost effective process to upgrade from the first version of the Glenister & Co Alliance deed to the latest.

Replacing a trust deed is not a matter of throwing the current deed out the window and ordering a new deed. This is simple but dangerous, as it would result in the resettlement of the existing fund. As a result, all assets of the previous fund are deemed to be disposed of thereby realising capital gains, stamp duty plus requiring double reporting for that year.

The process to upgrade a trust deed simply and effectively to a Glenister & Co Alliance SMSF trust deed with a PDS is as follows:

1. Call Denise Campanaro on 03 9457 5577 or email on denisec@glenister.com.au with details regarding the number of deeds to be upgraded so that we can determine a time frame and special, volume price. We will send you a proposal outlining the process to be undertaken, together with pricing and any special requirements;

2. Communicate with your clients by letter with reasoning, pricing and authorisation. As mentioned above we have a template you may use for this purpose and may wish to take this opportunity to communicate other information you feel is appropriate, such as any marketing or firm updates;

3. Complete the latest version of the deed upgrade order form for each deed. We appreciate clear, legible writing to reduce the risk of mistakes in the documentation. Alternatively we can send you a spreadsheet to be used for each batch of deeds;

4. With each order form please send the original copy of the deed together with any subsequent amendments or replacement deeds.

5. If other changes are required, such as change of trustee, fund name etc, these may be undertaken at the same time. Relevant forms for these changes may also be found on our website in the trust deed area. Please come back to me about pricing if you have a significant number of funds that require a change of trustee as we can improve on the standard price ordinarily charged for this service.

6. We will upgrade the deeds and return them to you for execution by your clients. Each deed upgrade package includes:

   • 2 bound copies of the new Glenister & Co Alliance SMSF Trust Deed Rules
   • PDS in 3 components
   • Amending documentation



7. We recommend that you provide your client with a copy of the upgraded deed with PDS. The package has been designed to be more easily understood by clients and advisers alike thereby enabling them to understand their trustee responsibilities and member entitlements.

Change of Trustee
You may find that when you are sifting through your clients' old deeds that some clients require a change of trustee. There may be circumstances where a person may no longer be eligible to be a trustee or it may be appropriate to replace individuals with a trustee company. Either way it is important for the trustees to satisfy the requirements of section 17A of the SIS Act, otherwise the fund will not meet the definition of a self managed super fund.

We can prepare the necessary documents to give effect to the change of a trustee.

Ongoing Trust Deed Maintenance

Once all your clients' deeds have been upgraded to the Glenister & Co deed and PDS, the deed upgrade process should become a lot simpler. We are currently developing a process to maintain the deed on an ongoing basis for your clients at a cost of around $150 per deed each twelve to eighteen months. As part of the first upgrade to a Glenister & Co deed you might propose to your clients - either in the client letter or summary of administration and audit costs - that part of their annual accounting fees include a deed maintenance fee. We can discuss this in more detail as the process unfolds.

We look forward to hearing from you shortly, once you have had a chance to consider all of the information. In the meantime, please do not hesitate to contact Denise Campanaro or Ian Glenister if you have any further questions.

What You Get With An Upgrade:

1. Standard trust deed upgrade package which includes:

   • Review of amendment clause of existing deeds and preparation of appropriate documents to give effect to the amendment including minutes and notifications
   • 2 copies of the deed
   • PDS solution in 3 components



2. Trust deed upgrade and compliance documentation package which includes:

   • Standard trust deed upgrade and documents
   • Documents for various transactions that may occur in the fund including:
   • Contributions - in specie, spouse, employer, employer spouse, self employed
   • Membership application
   • Trustee appointment, dismissal and resignation
   • Notification of benefit payments including the request for payment of a pension
   • setting up an investment reserve
   • paying a disability benefit
   • notice to new members
   • appointment of a SMSF adviser, financial planner, accountant, auditor or actuary

The premium package represents real, educational value for clients that are serious about understanding the many strategies available to them in their SMSF as well as their role and responsibilities as trustees.

DISCLAIMER
Please note that this information should not be relied upon for decision making or providing advice without seeking expert opinion. Glenister & Co exclude all liability relating to relying on this information.