Do I need to do a Deed of Variation to add/remove a member for an SMSF?

Question 

"I want to add/remove a member to/from the SMSF - Do I need to do a Deed of Variation?"

Answer

We often see clients using the SMSF Deed of Variation after they have added or removed a member to the SMSF. If you do use the SMSF Deed of Variation document form, for the purpose of updating its members, you must understand its implications. 

If you change the SMSF's members, it is not necessary to change the Deed via a Deed of Variation. Rather, the provisions of the SMSF would generally allow for copies of documents (including Trustee Minutes which would be drafted), showing a person has been admitted or has ceased as a member, as sufficient evidence of that change. 

Sometimes, however, third parties (i.e. banks) will have their own internal policies requiring you to have an amending Deed drawn up to reflect the change in members.

There are two solutions to this:

1. Use the SMSF Deed of Variation form

If the SMSF Deed is due for an update, you may use the SMSF Deed of Variation form.

You can update the Schedule to reflect the current state of the SMSF's members but be aware that you will effectively be adopting a new set of rules for your Fund. 

Before the SMSF Deed of Variation is signed, however, you must ensure that you have addressed the member admission or exit in accordance with your SMSF Deed and the SIS Act (this would include completing and signing the relevant procedures and document forms). 

2. Email legal@nowinfinity.com.au and we will refer you to our Legal Services Provider who can draft the necessary deed for you on a fee-for-service basis

This solution would be more appropriate if you do not want to change the Fund's rules and would prefer just a deed addressing the member change. 

 

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