Security Trusts

A Security Trust (previously known as an Asset Acquisition Trust) allows purchase of property by your Self Managed Superannuation Fund (SMSF).

Under section 67 (4A) of the Superannuation Industry (Supervision) Act the trustee of a SMSF may borrow money for the purchase of property (including real estate and listed securities) by the use of a Security Trust.

The Security Trust is merely a legal structure that allows the division of the beneficial and legal ownership of an asset. The trustee has legal ownership only and holds the asset in trust for the beneficiary. The beneficiary may at any time instruct the trustee to transfer the asset into the beneficiary's name.

What we provide

  • Trust Deed and fully completed documentation to establish the Trust
  • Trust Deed amended to suit lenders requirements (if required)
  • Trust Deed approved and issue authorised by company solicitors
  • Permanent binder for Trust records
  • Delivered to your nominated address

We are able to supply a Security Trust and Corporate Trustees for either the SMSF or Security Trust.

Fill in our Order form to proceed with the formation of your Security Trust.

Requirements

A superannuation fund trustee can borrow to acquire a beneficial interest in an asset that is held on trust providing:

  • It is the fund trustee (SMSF) which enters into the borrowing agreement
  • The borrowed money must be applied to the acquisition of an asset other than an asset prohibited by SISA or any other regulation
  • The loan must be a limited recourse loan, so the lender's security is limited to the assets bought using the loan and in particular does not extend to other assets of the fund
  • The fund trustee is not the legal owner of the asset and the asset must be held in trust with the trustee of the superfund holding the beneficial interest in the underlying asset, that is, by way of a Security Trust
  • The fund trustee holding the beneficial interest must have the right to acquire legal ownership of the underlying asset upon making one or more payments
  • The underlying asset must not be a prohibited in-house asset had the fund held it directly.

Please note that it is preferable that the trustee of the Security Trust is a corporation rather than an individual. Some lenders also require that the trustee of the SMSF also be a corporation.

Disclaimer

Please note, that we act for our client being the accountant, solicitor or financial adviser only and not for the trustee of the SMSF. Our role is limited to the preparation and supply of legal documentation for the establishment of the Security Trust and Corporate Trustees as required, to the trustees of the Security Trust and SMSF, from information supplied by the accountant, solicitor or financial adviser.

We confirm that we do not give advice as to the use of the Security Trust or any property purchase or borrowing associated with the Security Trust.

Please contact us if you wish to discuss any aspect of the establishment of the Trust.