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SMSF, Unit Trust & Property (NSW)

Discussion in 'Superannuation, SMSF & Personal Insurance' started by qak, 28th Nov, 2011.

  1. qak

    qak Member

    21st Nov, 2011
    My friend has an SMSF which owns all the units in a unit trust.
    The unit trust owns two properties in NSW that are rented out to 3rd parties.
    He and his wife are individual trustees of the SMSF and of the Unit Trust.

    The new SMSF auditor wants them to prove the ownership of the properties, and said that if anyone made a claim on them personally they need to have something on the title to protect the SMSF interest.

    It sounds like they need a solicitor to help them. What is the lowest cost way of doing this? Are they going to have to pay stamp duty on the value of the properties?

    edit: there are no borrowings involved.
    Last edited by a moderator: 28th Nov, 2011
  2. Terryw

    Terryw Well-Known Member

    9th Jun, 2006
    Possibly need a caveat lodged on the title specifying the own it was trustees for the unit trust.

    It doesn't sound like a good set up as they would be listed as legal owners and then as the unit holder legal owners as well. You cannot have a trust with these positions being the same because you cannot hold trust assets for yourself. But, in reality, they are holding units for themselves as owners of the SMSF trust.
  3. Superman

    Superman Well-Known Member

    6th Nov, 2007
    Gold Coast, QLD
    Terryw has it right

    Caveat should be registered against the titles showing the unit trust as the owner of the properties. This should have been done straight after the properties were purchased.

    The unit trust certificates and register (which should be prepared and maintained by the accountant on behalf of their clients) should also note that the individuals hold the units as trustees of the SMSF (i.e. beneficially held).

    One of the reasons I always utilise a corporate trustee for my SMSF clients is to easily and cleanly separate the legal ownership from other assets - such as assets owned personally or in another trust.

    If you need any further information or a referral to a NSW lawyer who can organise the caveat, please PM me.