Key Highlights

  • The deed sets whether assets can be transferred to members rather than sold.
  • It also sets the process for ending the fund.
  • Trustees needing to interpret or amend it should seek independent legal advice.

The trust deed is the fund's rulebook, and in a wind-up it can shape almost every decision. Super law sets the outer limits, but within those limits the deed decides things such as whether assets can be passed to members rather than sold and what process is required to end the fund. Reading it first can prevent a costly rethink halfway through.

This is evergreen guidance drawn from the ATO's wind-up page (last updated 2 April 2025), its guidance for auditors of winding-up funds (updated the same day) and its pension rules page (updated 30 April 2026).

What the ATO tells trustees to check

The ATO's wind-up steps begin with the exit plan and trust deed. It tells trustees to look at fund-specific rules, with the example of whether assets can be transferred to members instead of being sold. That one question can change the whole strategy. If the deed does not allow in-specie transfers, trustees will need to sell assets and pay out cash or roll over cash.

Auditors take the deed seriously too. The ATO's guidance for auditing a winding-up SMSF says the auditor should confirm that any wind-up requirements in the trust deed have been met. If the deed prescribes a notice period, a trustee resolution, a member consent form or a particular order of steps, the auditor will expect to see evidence that it was followed.

Provisions worth reading closely

Without suggesting any particular deed contains them, trustees commonly check clauses covering the following.

How a decision to wind up is made, and by whom. The ATO says all trustees should agree and sign a written wind-up agreement, so a deed that requires member consent or a specific form needs to be matched to that process.

Payment of benefits. Whether the deed allows lump sums, pensions, rollovers or in-specie transfers, and whether any conditions apply.

Death benefit rules. The ATO's death-of-a-member page says the trust deed must be followed even if it differs from the will, and that without a binding nomination the remaining trustees decide. Where a member has died before closure, these clauses are crucial.

Pension rules. The ATO notes that its pension standards, such as limits on how a pension may pass on death, may require trust deed provisions to be consistent. The pension page also advises consulting a legal adviser when amending a deed to meet these standards.

Powers of the trustees, including selling assets, paying expenses and appointing professionals.

Amending a deed

Sometimes the deed does not allow what the trustees need. Amending it is possible, but it should be done carefully and within the deed's own amendment powers. The ATO's pension page recommends consulting a legal adviser when amending a deed. Trustees should not assume that a simple signature is enough; any change must respect the fund's governing rules and super law, and the ATO is not a source of deed drafting.

Out-of-date deeds

Funds that have been running for many years may have deeds that predate current law. Trustees should ask whether the deed has been updated and whether it reflects the way the fund actually operates. This is practical advice rather than an ATO requirement, but an old deed that does not permit an intended step can cause avoidable delay.

How the deed interacts with law

The deed cannot override super law. For example, even if a deed appeared to permit an early payment, a payment without a condition of release remains a problem under super law, which the ATO says is taxed as ordinary income and may attract penalties. The ATO's guidance emphasises both: trustees must confirm a condition of release is met and that fund rules allow the release.

A hypothetical example

Suppose trustees plan to transfer a small share portfolio to a retiring member. Before doing so, they would want to confirm the deed allows in-specie benefit payments, that a condition of release has been met, how the shares will be valued, and that the transfer is minuted. If the deed is silent or restrictive, selling the shares and paying cash may be simpler. This is a hypothetical illustration only.

Practical considerations

Obtain the original deed and all amendments. Highlight the clauses relevant to a wind-up. Ask the fund's administrator or lawyer if any clause is unclear. Keep the deed and amendments with the fund records, since the auditor may ask to see them.

Takeaway

The trust deed should be one of the first documents trustees pick up when closing a fund. It determines how the wind-up decision is made, how assets and benefits can move, and what the auditor will test. Trustees who need to interpret or amend it should seek independent legal advice.