Death of smsf trustee

Does SMSF have trustees? What happens if a SMSF trustee dies? What is a SMSF binding death benefit? Superannuation SMSF structuring.

Upon the death of a trustee , it is normal practice for the their legal personal representative (the executor or administrator of the estate) (LPR) to stand in their shoes in their capacity as either an individual trustee or a director of the corporate trustee so that the fund still falls within the definition of an SMSF under superannuation law.

What happens when an SMSF trustee dies – be it an individual trustee or a director of the corporate trustee? Who takes over running the fund? And who decides what happens to the deceased’s fund assets? How is an SMSF trustee different to the trustee of a ‘normal’ trust?

These are the questions we asked Rani Ghanda of Turnbull Hill Lawyersin Newcastle. And she kindly walked us through the issues in this episode of Tax Talks. Here are a few notes of what we learned but please listen to this episode of Tax Talks as Rani Ghanda explains all this in much greater detail and much better than we ever could.

See full list on taxtalks.

Your super is held in a trust aka super fund. And so is not part of your personal property. As you know an SMSF either has individual trustees or a corporate trustee. If the individual trustee of an SMSF dies, the deed of the super fund dictates who then controls the fund.

If the director of the SMSF’s corporate trustee dies, the constitution of trustee company dictates what happens on the director’s death. So the first point of call is always to read the deed and – in the case of a corporate trustee – the constitution to see what happens when a trustee or trustee director passes away. Most trust deeds and constitutions deal with death. They outline what happens when a trustee or trustee director dies.

However, most deeds and constitutions forget to outline what is to happen when someone hasn’t died but lost capacity. This is a very common issue. These are only some of the points Rani Gandha of Turnbull Hill Lawyers covers.

Please listen to this episode of Tax Talks since Rani covers this in much greater detail and much better than we ever could. ITAANANI SIS Act NANI Death Benefit Disclaimer: Tax Talks does not provide financial or tax advice. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.

Last Updated on Tax Talks spoke to Rani Gandha - Partner at Turnbull Hill Lawyers- for more details. Ideally the SMSF deed’s governing rules would allow for a successor trustee to be nominated so that upon death of the nominating trustee , the person nominated as the successor trustee steps in. Is the Change SMSF Trustee ( death of a trustee ) package suitable for when a director of the corporate trustee has passed away?

With individual trustees all SMSF assets are owned in the name of the trustees. On death of one trustee , ownership will need to be changed to the new trustee. Often, that is the time when the surviving member (usually the spouse) chooses to put in place a corporate trustee. Differences between SMSF trustee structures.

In the event of the death or incapacity of. The member may have made a death benefit nomination asking the SMSF trustees to pay their death benefit to their nominated beneficiaries. The nomination may be binding or non-binding. The terms of the SMSF deed are crucial as it determines the criteria to be followed for a valid binding death nomination.

Australia Income Tax Treaty exempts superannuation from U. We can provide a Tax Opinion to secure the legal exemption. The recent case of Dawson v. Dawson once again shed light on the importance of following procedure in the event of a member’s death. On the death of a member, the first issue is to determine what constitutes a quorum for a director’s meeting. The death of a SMSF member can have a substantial impact on the fund. The Court removed Caroline and her husband as trustees , overturned the fund’s decision to pay the entire death benefit to Caroline and ordered the appointment of a new trustee.

Lessons Learned So the legacy of this case is that SMSF trustees no longer have a wild card for the payout of death benefits when there is no binding nomination. But if the trustee just took their time to pay out the death benefit without good reason, then the Tax Office may take compliance action against the SMSF. Depending on the SMSF ’s trust dee the deceased’s super may be paid either as a pension, a lump sum death benefit or both.

In this case, care needs to be taken about who acts as the trustee. You also need to plan for what happens if you lose legal capacity, leave the country, or die. Let’s start with some basics… Using a company trustee.