Why your SMSF assets need to be in the right name

If you know you have superfund assets in the wrong name (or think you might), today’s blog article is just for you. It sounds obvious, but this simple mistake or oversight could have some pretty devastating consequences, and we want to help you nip them in the bud. 

The issue. 

In case you didn’t already know, SMSFs have compliance obligations, encompassing eight core trustee covenants. For example, this includes a requirement that trustees keep fund money and assets separate from personal assets. 

If a covenant is breached, the trustees risk being sued… Now you’re starting to see why the name thing is so important, right? Additionally, the assets in your SMSF are protected from your creditors. However, that protection only works if SMSF trustees ensure the accounts and investments of the fund are held in the correct name. The main areas you need to watch out for in terms of name correctness are property purchases with your SMSF, share purchases, crypto currency purchases and bank accounts of your SMSF. 

Long story short… 

If the fund has individual trustees, purchase contracts and assets must be held in the name of all the individual trustees as trustees for the superfund. Where a company is used, the assets must be held in the name of the company as trustee for the superfund. 

A word on changing titles. 

Incorrect names often appear with SMSF details due to an unregistered name change, which is usually an innocent oversight. If you need to change a trustee, you have to ensure the fund's bank accounts and investments are updated as well. When an asset is acquired by the SMSF, the documentation must note the change of ownership and record the change of name or title. 

Changing the asset title can be overlooked where the SMSF has individual trustees. A common misunderstanding is where an asset is held personally, and the individuals are also trustees of the SMSF, that no further action is required. This isn’t the case — trustees must ensure contracts and transfer documents are completed. These must clearly show the change in ownership to the SMSF. 

Need name help? 

A number of people setup share accounts incorrectly in their own names, and not correctly in SMSF. If you even have the smallest niggling doubt, get advice from a professional. They’ll help you understand the correct wording of your SMSF structure and ensure all documentation is filled in correctly. Talk to us about your SMSF, and if necessary, we can connect you to trusted legal professionals at the same time.