If you have a self managed superannuation fund (SMSF) it is essential that you as trustee regularly review the deed to ensure it is up to date. One benefit is that an up to date deed will give you access to the latest strategies as they become available.

When was your SMSF trust deed drafted? Review the list below produced by LawCentral to discover if and why you need to review your trust deed as soon as possible.

SMSF pre 2009

Since 2009, SMSF Deeds need updating because of:

• Compliant with Auditing and Assurance Standards Board (AUASB) Guidance Statement GS 009.
• Allowing you to borrow money on a limited recourse basis (Instalment Warrants) under section 67(4A) SIS Act. Sadly, many regimented deeds (even some new ones we have seen lately) actually go out of their way to stop borrowing and charging of SMSF assets. (See the ATO’s view here).
• Allowing death benefit nominations to be typed into the trust deed so that they don’t expiry every 3 years.
• Don’t restrict membership – there should be no restriction in your deed as to who can become a member – the rules change and you don’t want to miss out.
• Don’t restrict contributions – old regimented deeds prohibit many classes of people from contributing to your Super. What a waste of time to put in such restrictions. The government, fearful of people running out of superannuation and collapse of the age care pension, are increasing the classes of contributors.

SMSF pre 1 July 2007

Since 1st July 2007, SMSF Deeds need updating because of:

• “Plan to Simplify and Streamline Superannuation”, from 1 July 2007, once you turn 60 you can take out your Super tax-free, unless you Deed states otherwise (2007).
• New strategies allow you to turn off and then turn on pensions. Some can be converted to accumulation mode. However, some trust deeds require rollovers be paid to other funds, even if you want to continue to hold them in your fund.
• Account-Based Pensions and Transition to Retirement Incomer Streams were released in April 2007. Your deed must allow for their payment. Sadly, many older deeds don’t allow for them.
• Compulsory cashing rules are mostly abolished, except for death. However, many deeds still enforce compulsory cashing.
• Estate Planning – more people will now retain wealth in their Superannuation until their death. The Superannuation may well be lost to the wrong people or the tax man. Binding Nominations are required.
• What if by mistake you put in too much money into your Super? Unless you can reject or return the excess funds you suffer a high tax rate. The deed must allow the power to reject and return funds.

SMSF pre 2006

Since 2006, SMSF Deeds need updating because of:

• Thanks to the 2006 Budget SMSF deeds will become shorter and simpler over time. The pension payment sections of old SMSF Deeds are long and laborious. Such complexities are being phased out in the deeds. A lot of complex rules can be removed.
• SMSF deeds less than 6 years old: Many SMSF deeds have a deeming provision to include all the new SIS rules. This helps. Sadly, these provisions operate only on those mandatory issues that SIS requires a SMSF to follow. What if a SIS change is not mandatory? What if the Deed applies stricter terms than required by SIS?
• Since 12 March 2004 it has been considered courageous to operate a SMSF without a complying Product Disclosure Statement (PDS). The PDS contains everything that a trustee is expected to know. If you act for a SMSF (as an accountant, auditor, adviser or lawyer) and there is no PDS then the trustee has a higher chance in successfully suing you. This is based on negligence for your failure to bring everything the trustees needed that the trustee needed to know. The PDS protects the professional advisers as much as it protects each trustee from each other.
• Contribution Splitting – Spouses can split super contributions between accounts or Funds. Your Deed needs to allow this to happen. (November 2005)
• Your Deed should be able to permit minors (people under 18) as fund members.
• What happens if a member is totally disabled? This can be permanent or temporary. You need to have a right to that payment. Power needs to be in the deed so that if a member is totally disabled, then the trustee can pay a benefit provided there are funds available from the member’s account or from the proceeds of the insurance policy.

SMSF pre 1999

Since 1999, SMSF Deeds need updating because of:

• New market-linked pensions. (2004)
• Interdependent relationships for beneficiaries. (2004)
• Acceptance of government Co-contributions. (2003)
• Changes to compulsory cashing of benefits rules.
• Changes to contribution acceptance rules. (2004 – Changes to over 65 contribution and benefit payment rules)
• Divorce and super splitting. (2003)
• All members must be trustees. (1999)
• When the Australian Taxation Office took over supervising the SMSF funds most deeds were updated – but not all. Without updates the concessional tax treatment may be lost. (October 1999)

SMSF pre 1995

For deeds last updated from 1995-1999 you need to address these additional issues (as well as the ones above):

• Accepting your wonderful spouse as a member and for contributions. (1997)
• Expanding the in-house asset rules to related parties. (1999)
• Providing for complying lifetime and term pensions. (1998)
• Binding nominations for death benefits (otherwise your son in the SMSF can direct your Super goes to him and not evenly to all your children). If you don’t have a “binding” nomination then the nomination form you sign merely expresses your wish to the trustee. The Trustee can decide who gets your super when you die. Sadly some deeds stop the member having any choice. (1999)
• Full preservation of your Superannuation. No taking back out your undeducted contributions. (1999)
• New regulation – ATO takes over looking after SMSFs.(1998)
• Need to include complying term and life-time pensions. (1998)
• Ensuring you get the CGT retirement component. Up to $500,000 can go into your superannuation CGT free from the sale of business assets. (1997)
• The ever useful expanding of acquisition of asset rules to related parties. (1999)

SMSF pre 1994

Don’t point out the “old age” to your auditor. Just update it. You need the above plus:

• Uses of Pensions or Corporations powers.
• Election to become regulated.
• Covenants by the Trustees.
• Allowing you to adopt rules under the SIS Act for compliance.

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(Recorded 3rd July 2008.)

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Parents often list a goal of wanting to contribute to their children’s weddings. And independently minded young couples often want their dream wedding without the “suggestions” from their well-meaning parents – thus they want to pay for their own wedding.

Weddings are costly and not an expense most people can easily absorb into their income for that year. That means they need to be save up for and most people get that. But how much does a wedding cost and how early do you need to start saving?

Earlier this year Bride to Be magazine released the results of their Cost of Love 2008 survey, which found the average cost of a wedding was $49,202.

That is only a couple of thousand dollars less than the average Australian wage before tax.

Since many couples probably earn less than the average wage they need to be saving one partner’s full wage for probably two years or more just to pay for their own wedding. That could be a tough ask especially if you are also saving a deposit to buy your marital home.

When you’re already dreaming start saving

Perhaps a better approach would be for ladies who dream of a lavish wedding to start saving right now, even if you are not yet in a committed relationship. When cupid strikes the wedding can creep up quicker than you can save.

Blokes Beware – Bling is Costly

Blokes should also be aware that the average cost of a bride’s engagement ring was $5,116. It seems the old notion of three months wage may be continuing. So if you are a traditionalist then get saving right now mate, ‘cos you don’t want to pay costly credit card interest on a depreciating asset like a ring.

Then of course you need to consider the wedding bands. They cost an average of $1,507 for the bride and $1,096 for the groom.

Remember that costs increase

One tip when you are establishing your savings plan is to factor in an increase in costs. One article about the survey results reported that the average wedding cost had risen 76 per cent in eight years. That equates to cost increases averaging 7.3% each year.

Save for your dream wedding

Your wedding and honeymoon are not the most important events in your life but they are one during which you get to be the centre of attention and one that will be remembered. So if you want to be able to do it as you dreamed it the ensure you have saved for it. Don’t make it any more expensive than it needs to be by borrowing money and paying interest.

Save for the significant events in life and you can have enough money for what you really want.

(I can’t find the official survey results on the magazine’s website but they were widely reported in newspapers including here and here.)

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My last article on Making Money Writing About Your Passion prompted this enquiry from regular reader, Nick:

“how can you generate an income stream from e-marketing and even sales of products of your expertise and knowledge”

You can make money from your expert ideas in your head – it’s called thought leadership. (I also recently wrote about Bernard Salt’s suggestion to become a thought leader.)

You make money from your thought leadership both online as Nick enquired and also the traditional offline methods such as speaking, mentoring and consulting.

One of the best thought leaders I know in the area of making money from your thought leadership is Matt Church. If you are interested in making money from the ideas in your head, as reader Nick is, then I strongly recommend you start by reading these two resources from Matt Church:

• This brief article “How to Become a Million Dollar Expert“; and
• This e-book “Sell Your Thoughts: How to build a high six figure income from the ideas inside your head“

If you like what you read then I recommend you also join the Australian Thought Leaders Community. (WA readers who want to be thought leaders should contact me directly as I have some guest passes to our Perth based monthly member events.)

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Today I came across two really useful articles about doing this.

Why Now is the time to Cash in on your Passion

First I came across a review by BookRapper Geoff McDonald of the book “Crush It” by Gary Vaynerchuk. Crush It is about “Why Now is the time to Cash in on your Passion”. I’ve been a fan of Geoff’s BookRaps for a couple of years and this review of Crush It! is just as insightful.

I recommend watching the video of Gary Vaynerchuk in Geoff’s article. Vaynerchuk passionately expresses that you should pursue your passion and that you should be able to make money doing so. In the video Vaynerchuk talks about starting a blog about your passion. Then once you build a community of regular readers you can start to monetise the traffic.

How one Australian has made money blogging

Secondly I just read an article by professional Australian blogger, Neerav Bhatt in which he reveals how he makes lots of money from blogging. He makes enough that he quit his former salaried role, which is something almost all of my financial planning clients dream of doing. As Bhatt reveals he writes about his expertise, his experiences and his passions.

I’m sharing my passion with you right now

This site is me writing about my passion. I wasn’t always a financial planner – I started my working life as a petroleum engineer for BHP Billiton Petroleum. But all the time I was reading and learning about managing and making money.

When I eventually changed careers and started studying financial planning I constantly thought “why didn’t anyone tell me this about money and wealth creation?” I just had to tell everyone I knew. At the time my outlet was dinner parties. Now I write and speak.

I am passionate about sharing the simple, easy to understand things about money that have a high impact on your lifestyle but at also are low effort to implement. In that way I dream for us all to have enough money to pursue our passions. Plus you’ll have more time to pursue your passion because you’ll be spending less time managing and stressing about money.

What’s your passion? Time to start sharing it with people via a blog? You’ll discover other people as passionate as you living all over the world. For the next steps read the above resources.

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If so, then this e-book is brimming with ideas to help you kick start the new decade.

My article, “How To Have Enough Money For What You Want” is on page 17.

Most things in life require money to support them. My article shares a process to help you have enough money for those things in life that are most important to you. So if you are reviewing 2009 and setting new goals for 2010 my article is on the money about the money to support you achieving those goals.

You can browse the entire book below or download a copy to your computer.

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Almost all respondants said that they think about these things daily or a few times a week. That is a lot of time and energy consumed on money matters instead of spent doing the things you really love. Better to resolve the issues and spend more time with family and friends, or pursuing your hobbies.

Most issues fell into these three broad categories: Planning, Saving and Investing. For example:

“How will I have enough money for…”

“How can I save more money for…”

“Where is the right place to invest my savings?”

For an insight into the process to resolve these issues watch the recording of the webinar below.

The recording is 45 minutes. A small time investment when you consider the time cost of repetitively thinking about financial issues without resolution.

For assistance to make more clear, confident financial decisions call me.

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I recommend this article to you if you are interested in how the financial decisions of nations interact and impact on the global economy. (You could call this macro-economics).

Read “Death Throes of A Monster” here. (If that link to the original source has expired read the article here.)

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This is very applicable in the world of financial advice and many clients are not aware of it.

Unfortunately, when you don’t know any different you are often also oblivious to the consequences, which include:

• Missed opportunity
• Higher stress from strategies and products that don’t ideally suit your personality and needs
• Higher costs and lower value-for-money
• Missed lifestyle goals

Example Hammers in The World of Financial Advice

A tax accountant thinks a Self Managed Super Fund is the answer to getting control over your superannuation.

Why? Because they’re not licensed to recommend other off-the-shelf products. (Which, by the way give you great control without the legal responsibility of a SMSF.) And because they’re not licensed to give such advice they naturally wouldn’t spend any professional development time researching alternate options.

A stockbroker thinks owning direct shares is the best way to create wealth.

While a real estate agent or property developer thinks residential investment property is the best way.

And your mates and colleagues think the best way is the way they are doing it!

Why? Because it’s probably the only way they know. (Plus you doing what they suggest sub-consciously validates their decisions. It’s a psychological phenomenon of herding or “group think.)

(Apologies to readers in the above professions who cleverly operate outside the above generalisation. Keep it up!)

Ask Yourself

Since so many types of professions can call themselves “financial advisers” ask yourself which tool is the focus of their tool box?

You Need A Team with a Tool Box

The truth is that there is no one best way and no single tool that will be all you need through your life.

Almost everything in life requires money to facilitate it. So your financial planning and management needs to be as deep and broad as your life.

That’s a life long job that requires a diverse tool box.

Rather than doing and knowing it all yourself you outsource some of that planning and management to the financial professions.

Your best solution is to build a team of experts.

Your Team

Your primary contact when managing your finances should be a comprehensive financial planner.

True financial planners have a tool box full of various tools. They assess the problem/goal and then select the right combination of tools.

Taking the metaphor deeper, true financial planners may not actually swing all the tools themselves. After identifying the right tools they may recommend specialists for certain tools that you need.

This is illustrated in the image below:

Who to call

So when you have a financial problem or a decision you are mulling over don’t just speak to your accountant or investment adviser. They may not have the right tool for the job.

Instead speak to your financial planner who has a comprehensive, contextual view of both your situation and the world of financial strategies.

And if you don’t yet have a big picture person in your team then call me today.

What do you think?

Share your thoughts about this perspective in the comments below. I’d love to know:

• How do you currently solve the bigger picture aspect of your financial decisions?
• Who do you turn to for help?
• Who are valuable categories of advice professionals in your team?

And what financial decisions are occupying your mind right now? Complete the survey here

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