It’s important to be aware of the fact that any weak links in your client’s SMSF documentation chain could break their entire estate plan.
SMSF specialists have a duty to keep things on track and ensuring estate planning documentation is in order is essential.
It is critical to review all of the documentation for the SMSF, not just the deed but the entire chain of documents. While the trust deed is important, it is important to check the previous documents to ensure there are no issues in the paper trail and the latest documents are valid if changes have been made.
What documents should be in your SMSF estate planning file:
- Trust deed establishing the fund
- Any subsequent variations
- Any change of trustee documentation
- Details of the directors and shareholders of the corporate trustee
- Constitution or memorandum and article of association for the trustee company
It’s important to undertake a proper review of these documents by working through the documentation in chronological order to check the following:
- Any restrictions in the variation of power
- Whether the deed of variation has been executed properly and by the right parties
- That any changes of trustee have been carried out properly
There are a few common issues you should be looking out for in SMSF estate planning documentation including:
- The trust deed was not varied in accordance with the variation power
- A personal or company that was required to consent to a variation or change of trustee has not done so
- Documents in the chain are missing or incorrect
- A document was not correctly signed or dated
It’s important to consider that if there are chinks in the SMSF estate planning documentation chain, it may mean deeds are not valid which can mean there is some uncertainty about the payment of a death benefit upon the client’s death. This is a huge risk for advisers, and it is important to ensure all documentation is in order to avoid these issues.
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