Satisfying Your Trustee Obligations
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Agenda Satisfying your Trustee Obligations Peter Bobbin Head of Personal Legal Services Argyle Private How SuperIQ and Super Concepts can help Peter Lalor General Manager Nick Ali Head of Technical Services & Education SuperIQ & Super Concepts
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Pleasure and Pain Trustee Obligations By Peter Bobbin December 2014
Disclaimer? There is none! Trust me, I am a lawyer! 6
It has trillions of dollar$. It s $UPER It is the second greatest investment to the family home for all Australians It is the fastest growing area of litigation in the country!
Super is a potent mix of. 8
You will see super everywhere There are 500,000+ super funds that have, do and will affect millions of Australians 9
You will see super everywhere SMSF s & SAF s Industry Funds Government Schemes Trustee Public Offer Funds
Key questions to ask and how to ask these because you may not know what you need to know or what you should know or what you can know. Even if you know you do not know, you may not know where or how to find out what to know. 11
Key questions to ask and how to ask these The 1 st most important question is; Be self centred! What has he, she or they done or not done such that if anything happens to them it will impact upon you 12
Key questions to ask and how to ask these The 2 nd most important question is; Be ATO centric! What does the ATO want to see and do I/we/they have this documented and in a safe place? 13
Road Rules for Super Not yours until; age 60 or death The most tax effective savings you can personally hold and control It is simple if you trust it personally It is dangerous if you do not The blow-in is a major risk They (the Government) cannot leave it alone, the rules will change 14
What you must know Four essential elements to all trusts the world over Trustee Trust Super Trusts Trust Property Beneficiary Duty 15
ATO hunting ground Analyse top 200 SMSFs (by value) Select 25 for comprehensive audit On-time SMSF lodgement is at 74% Audit 30 SMSFs who lodged very late Contact 3,000 Exempt Current Pension funds Audit and review 100 SMSFs with ECP claims Audit and review 150 auditors Trustees need to know their responsibilities from the outset and to seek good advice 16
ATO hunting ground The ATO does not accept the notion of a dominant trustee or a blameless co-trustee In 2012 completed 12,513 cases resulting in: 83 funds made non-complying 505 enforceable undertakings 295 trustees disqualified Stuart Forsyth, Ass. Commr, Superannuation, ATO, SISFA 2012 SMSF Forum 14 Sept 2012 17
The super risks I see Decisions made by one affect the other Thieving by one and they leave Australia You being told a lie by one and relying on this Weak security protocols against fraud Variable views on the application of SIS Law Super that is not designed Greater failures of death benefits The super pot is exposed, it is not asset protected unless a person is a bankrupt! 18
Tip no. 1 Your power and your role comes from Trust Law and the trust deed is most important 19
Tip no. 2 Read the ATO Trustee Declaration 20
Act honestly Ordinary prudent person care, skill and diligence for another whom morally bound to provide Duties and powers exercised in the best interests Keep assets separate
Not do anything that would prevent or hinder proper performance Formulate and give effect to an investment strategy that considers risk, diversity, liquidity, obligations and insurance needs
If there are any reserves, formulate and to give effect to a strategy Allow a beneficiary access to any prescribed information or any prescribed documents.
Become acquainted with the terms Get in and control property Not impeach the validity Not impeach title of beneficiary Adhere to and carry out the terms Act impartially Properly invest
Keep and render accounts Exercise reasonable care Not delegate duties or powers Pay and transfer property and income to the right persons Act gratuitously (ie for free)
Tip no. 3 Worry a lot about paperwork, the better it looks the less the ATO looks For example, if buy business real property from a related party keep the conveyancing paperwork to prove: It was true It is arms length Prove the CGT cost base 26
Tip no. 4 Use a company not persons as trustees; and Lodge the ASIC Superannuation Trustee Declaration. Why? Because Death & Disability is a major looming problem for all smsf s with natural person trustees Personal liability passes through bare trusts to the persons who are smsf trustees; they get sued personally and only enjoy a right of indemnity from the smsf. All of their personal assets are at risk. They bear occupier risk. 27
ASIC Superannuation Trustee Declaration only $45 per annum 28
Tip no. 5 Manage the super succession and control in a manner that suits you and who you intend for the super to suit 29
Super battleground & solutions Don t forget to deal with what was that again? After the age of 65 the likelihood of being diagnosed with dementia doubles every five years. People over the age of 85 years of age currently have a one in four chance of developing dementia. Who will be in charge when the fit one dies? What investments? Who will receive the income? Not everyone has trustworthy children! Australian Government Dep t of Health and Ageing Oct 2008 rockwellolivier.com.au 30
Super battleground & solutions Sort out the trustee control & succession Need a trustee appointment process The power needs to be current, not conditional Can put conditions to manner of exercise They cannot be paid. Consider supplementary guardian. rockwellolivier.com.au 31
Super battleground & solutions $uper leaves the family to the blow-in 32
An SMSF audit DONE Change person trustees to corporate Limit trustee company to super trustee only Review insurances needs now Does fellow trustee sign off on all docs Lodge on time, esp if large balance Investment advice backed by an authorised rep Does liquidity allow separation? Investment strategy review is continuous per Peter Bobbin, Argyle Private 3 3
An SMSF legal audit DONE Read the trust deed, it is too much not to Confirm all signatories on all accounts etc Design super to protect against a claim Empower trustee current decisions Confirm the death/tpd/ip benefits Note the ip and trauma outside super Review exempt pension income principles Consider maybe smsf is not appropriate per Peter Bobbin, Argyle Private 3 4
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SuperIQ & Super Concepts can help Context Member Dashboard functionality Investment Strategy Contributions Pensions Investments Annual returns General documentation Technical Services & Education team Structuring and tax advice Compliance breaches and rectification
Context Your fund s trust deed Superannuation law Superannuation Industry (Supervision) Act 1993 SIS Act Superannuation Industry (Supervision) Regulations 1993 SIS Regulations Income Tax Assessment Act 1997 (ITAA) Tax Administration Act 1953 (TAA) Corporations Act 2001 Refer to the ATO publication Running a self managed super fund
Member dashboard functionality Investment Strategy Contributions Pensions Investments Annual returns General documentation
Technical Services & Education Advice on issues such as: Lending / Borrowing In house assets Pensions Managing contributions caps CGT concessions Private rulings Compliance breaches and rectification