About Product
This is a special purpose loan agreement between a SMSF Lender and a Borrower which can include related Trusts and companies but not related individuals.
The Lender is a SMSF and variable interest, fixed interest, capitalisation of interest, interest only and variable terms are core ingredients of the Loan Agreement.
Can this document be digitally signed?
NOT RECOMMENDED. As this document, or pack of documents, includes the establishment of a deed and/or a signature requires witnessing, TGA Legal have advised that a digital signature on any part of the assembled document is NOT legally binding. This is in accordance with all current legislation. LightYear Docs will regularly review this position as part of its internal review process.
General Information
The LightYear Docs SMSF Loan Agreement can be used in circumstances where the SMSF seeks to loan monies to another party including a related company or trust.
If it is a related trust or company, the Trustee and their adviser must ensure that the terms and conditions of the loan are the same or similar to what a commercial lending institution would lend to that party and it does not exceed 5% of the assets of the fund.
Benefits
- Flexible duration – up to 99 years but ensure for related party loans (never individuals) that the term is the same as a bank.
- Interest only or principal and interest
- Payments may be capitalised
- Fixed or variable interest rates
- Mortgage and personal guarantee deed available
- The loan agreement cannot be used as a related party loan for a SMSF LRBA
Frequently Asked Legal Questions
Who prepares the LightYear Docs SMSF Loan Agreement?
This has been prepared by TGA Legal and abides with the provisions of the Credit Act.
Who can be the Borrower?
As the Lender is a SMSF, the Borrower can be any unrelated party or a related trust or company providing the terms and conditions are arm’s length. A related individual cannot be a Borrower.
What is the interest rate?
The LightYear Docs SMSF Loan Agreement enables the Lender and the Borrower to set the appropriate interest rate. However the Loan terms and conditions should be arm’s length.
What happens on the death of the Borrower?
If a Borrower dies, assuming that they are individuals, the deceased’s estate will take over the responsibilities of Lender or Borrower. It should be noted that death is a termination event under the SMSF Lending Agreement.
Is there training on the LightYear Docs Loan Suite?
The LightYear Docs Loan Suite is unmatched amongst any other document provider and full training can be found at www.lightyeardocs.com.au
Can the Loan Agreement be used for a SMSF LRBA?
The loan agreement cannot be used as a related party loan for a SMSF LRBA. Advisers should use The LightYear Docs RPA – Related Party LRBA meeting ATO guideline – PCG 2016/5 RRPL has the following ten documents compiled into one process:
1. A Product Disclosure Statement
2. The Commissioner’s guideline PCG 2016/5 as a reference for compliance purposes
3. Trustee minutes upgrading the deed and authorising the acquisition of a single acquirable asset under a Holding Trust
4. SMSF Deed Upgrade plus minutes
5. Investment Strategy covering asset and loan
6. Holding Trust establishment plus minutes
7. Related Party Loan
8. Mortgage Deed
9. Personal Guarantee (optional)
10. Lease if asset to be used for rental income (optional)
Is the LightYear Docs SMSF Loan Agreement reviewed regularly?
All LightYear Docs documents form part of the LightYear Docs internal document review cycle. All documents are scheduled to be reviewed at least annually or when required to do so due to changes in legislation. The LightYear Docs review cycle ensures all of our documents remain current and accurate.
Can this document be digitally signed?
NOT RECOMMENDED. As this document, or pack of documents, includes the establishment of a deed and/or a signature requires witnessing, TGA Legal have advised that a digital signature on any part of the assembled document is NOT legally binding. This is in accordance with all current legislation. LightYear Docs will regularly review this position as part of its internal review process.
What happens after I purchase this document?
After you purchase this document, you will experience first-hand the power of our assembly engine, HotDocs. An interview session will appear in what is called the HotDocs iFrame. Through the use of the iFrame technology, we are able to create document templates in minutes, versus months of coding through other methods. The iFrame also allows for rapid integrations and documentation to be assembled instantly in "lines" or packs of documents.
Can I edit my document after it has been completed?
Your document will be available to edit from the LightYear Vault for 30 DAYS after you have completed the interview process, at which point it will be locked for future edits. Your completed documents will be listed under "My Vault" from the drop-down menu in the top right-hand corner after you login. This is also where you re-launch an "interview" to make edits within the first 30 DAYS.
Can I save a document to complete later?
Yes, provided you select save, you can exit the interview process at any time. All documents that have been purchased and not yet assembled will be saved under "My In Progress Docs" and are accessible from the drop-down menu in the top right-hand corner after you login. This is also where you re-launch an "interview" to continue the interview process and assemble your document.