About trust deeds
A trust deed is a legal document that sets out the rules for how a self-managed super fund (SMSF) will operate.
Your trust deed can't override the law; however together with superannuation laws, they form the governing rules of your SMSF.
The trust deed must:
- be tailored to your fund to meet its objectives and the members' needs
- state that the fund's sole purpose is to pay retirement benefits to members or death benefits to members' beneficiaries.
Preparing the trust deed
The trust deed should cover areas that specify:
- who the trustees are
- who can be a member and their rights (such as rights to amend the deed and how members choose investments)
- when and how benefits can be paid (lump sum or income stream)
- how illness, incapacity and death of the members is dealt with (such as enduring power of attorney and binding death benefit nominations)
- situations that would require the SMSF to be wound up.
You can engage someone to help you organise a trust deed. However, as it's a legal document you need to make sure it's prepared by someone competent to do so.
There are services that offer packages or kits to help you prepare your fund's trust deed. If you buy a package or kit, make sure the trust deed complies with the current law and is unique to:
- your fund’s objectives
- your members’ circumstances.
All trustees must:
- sign and date the trust deed
- ensure it is properly executed according to the relevant state or territory laws.
Death benefit nominations
A death benefit is the payment of a member’s super savings to a nominated beneficiary if the member dies.
If allowed in the fund’s trust deed, a member can use a death benefit nomination form to identify who to pay their death benefit to and in what proportion.
The nomination can be either:
- binding, which directs the trustees to pay the death benefit to a legal personal representative or dependant
- non-binding, which notifies the trustees of the member’s preferred beneficiaries, leaving the trustees to make the final decision.
If you want to create a death benefit nomination, you should speak with an SMSF professional.