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  • Writer's pictureShane Ellis

High Court Case Confirms SMSF Trust Deed Being Up To Date Is Critical For SMSF Members’ Protection!

In a recent opinion piece published in The Australian Financial Review, SMSF Association chief executive John Maroney said while the High Court decision Hill v Zuda has provided certainty around how long a binding death benefit nomination (BDBN) can last, the consequences of the decision “flow far beyond this”.

Mr Maroney said the Court’s ruling has also provided clarity around reversionary pensions and has established that a BDBN can override pension documentation depending on the drafting of the deed.

“For trustees, this good news comes with one overriding message — the trust deed is paramount, and they need to ensure it is always up to date,” said Mr Maroney.

“It also means a BDBN can make a pension reversionary mid-stream,” he added.

Both these issues he said have been a source of conflict for the industry for some time, he stated.

“This court decision provides clarity that a BDBN can be everlasting and that they can be the ultimate estate planning document, trumping instructions in the pension documents. This provides certainty and clarity on how a member’s benefits are to be dealt on their death,” he stated.

“More importantly, the Hill v Zuda case highlights the importance of what your SMSF trust deed says. It is the ultimate law, setting out the rules on what the fund can and cannot do.”

As an important adjunct to the article & the High Court case decision Shane Ellis, SMSF Specialist Advisor from Shane Ellis Legal Group/SMSF Law confirmed that as well as the SMSF Deed needing to be up to date at all times, your SMSF estate documentation must comply with the content of your SMSF Deed.

He said, “I agree with John Maroney that your SMSF Deed must be up to date at all times. Beyond that your SMSF estate documentation must also be up to date at all times and also comply with the terms of your SMSF Deed in relation to whether Binding Nominations or Auto-reversionary Pensions have priority. Getting the documentation right now is critical and saves on the potential massive cost involved in sorting out any SMSF estate arguments after your death.

"Prevention is not only better than cure in the legal world, it is also much, much cheaper!

Source: Maroney’s comments in “SMSF Adviser” online magazine


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