Plain English trust deeds key for compliance, says lawyer
Complex trust deeds that are 100 pages in length are causing a lack of SMSF trustee engagement and are leading to compliance issues, a lawyer has warned.
Greenfields Lawyers senior counsel Caroline Harley said a lot of clients are purchasing documentation that may not suit their trust deed and part of the reason for that is the complexity of some of the trust deeds they have.
Ms Harley said law firms should instead be drafter shorter deeds around the 36 page mark that are written in plain English and don’t rewrite all of the SIS Act or regulations.
“That way it’s not out of reach for the trustees to engage with the trust deed so there will be greater compliance with the documentation,” said Ms Harley.
“At the moment there are trust deeds that around 100 pages in length or even 80 or 90 it perhaps it’s not as accessible for the trustees to pick up a trust deed and read it, it’s still perceived as a job for the lawyers.”
By preparing the trust deed at a much shorter length the SMSF industry she said can help bridge the gap between the trust deed and the trustees.
“I think a lot of trust deeds are a fantastic cure for insomnia and I think people’s attention really fades with the length of the deed so perhaps having a shorter trust deed will help keep the attention of trustees,” she said.