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CHANGES TO SELF MANAGED SUPER TRUSTEE RESPONSIBILITIES

There have been some recent changes to the responsibilities of SMSF trustees that are important for all Self Managed Super members to know about.  Self Managed Super is the most rapidly growing sector of the superannuation industry.  It is very attractive because of its flexibility and the general tax effectiveness of a superannuation structure.  It is one of the most complex financial structures you can invest through, so having the right advice is crucial.

SMSF trustees – the new duty to consider insurance cover for members

The Government has amended the superannuation regulations to require that SMSF trustees now give consideration to whether an SMSF should hold life insurance cover for its members. Previously, SMSF trustees were not specifically required to consider the insurance needs of members when formulating an investment strategy.

The new regulation will mean that trustees, who are also normally the members, must now consider insurance in order to discharge their obligations under the SIS Regulations. For newly established SMSFs, insurance should be considered when formulating the initial investment strategy. For existing SMSFs, this practice should form part of the regular investment strategy review.

What the legislation stipulates

Paragraph 4.09(2)(e) of the Superannuation Industry (Supervision) Regulations 1994 now requires that a trustee of a superannuation fund must formulate, review regularly and give effect to an investment strategy that has regard to the whole of the circumstances of the fund, including, for an SMSF, whether the trustees of the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund.

The Explanatory Memorandum to the new rule states that in meeting this requirement, trustees should have regard to the personal circumstances of their members. For example, if a member holds insurance cover outside of the SMSF, this should be considered in determining how much, if any, insurance the SMSF should hold.

Help is never far away

Regardless of changes to legislation, Empire Financial Group believes this is an important consideration in formulating a financial and investment strategy.  We’ve seen the claims first hand, and the financial relief a well considered and comprehensive insurance plan provides.  Furthermore, we feel this is an area that requires expert consultation.  We have extensive experience in preparing financial protection assessments and SMSF considerations, and can assist in preparing the recommendations to satisfy both these regulations, and the financial requirements of you and your dependants.

To speak to us further about this, call us on (08) 9323 3000 or complete the contact form found here:www.efg.net.au/contact-us

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