Death of smsf trustee

The reality of ageing SMSF trustees : death of an SMSF trustee SMSF structuring. Requirement to amend SMSF Trust Deed. In some cases, the Trust Deed must be amended if a corporate trustee will be. The death of an SMSF trustee is a big event in the life of an SMSF.

This is when the chickens come home to roost.

You either have it all laid out and the aftermath is as smooth as it possibly could be. Or it all hits the fan. 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. Consequently the death of a member will almost always require a change in the trustee arrangements for the fund.

Changing ownership documents when a trustee of a two-person SMSF dies is time-consuming and can be costly , writes Sam Henderson , who your questions on superannuation.

Whilst her death terminates the EPOA and George is no longer Shirley’s LPR, he will remain a director unless removed in accordance with the constitution of the corporate trustee. Along the same vein, Shirley’s death does not automatically mean that Tony and Lena (her LPRs upon her death) become directors of the corporate trustee. The tax applies on the death of anyone who still has assets in a superannuation fund and who has nominated beneficiaries to receive a payout upon their death. If the payout goes to a financial dependant – for example, including a spouse or child under the age of – it is tax-free. It is important to keep your SMSF and trustee information up to date to prevent any unwanted beneficiaries and claims.

For example, in the case of an unfinalized divorce or legally unchanged relationship status, a former spouse can claim the others’ superannuation death benefits. Conflicts of interest may arise upon the death of an SMSF member where the same person is the executor of the deceased’s estate , as well as the direct recipient of death benefits from the member who has passed away. Daniel Butler and Shaun Backhaus examine some recent court cases that determine how some of these scenarios can play out.

Is the Change SMSF Trustee ( death of a trustee ) package suitable for when a director of the corporate trustee has passed away? First, death is a compulsory payment situation. It means the deceased’s super cannot remain in their SMSF. It must be paid either to their dependants or their legal personal representative “as soon as practicable”.

The Tax Office will normally allow up to six months for payment. On the death of a member the trustee is required to deal with the member balance of the deceased. It is their responsibility, as set out under the SMSF trust deed.

In Re Marsella, Mrs Marsella had die with her daughter as the remaining trustee of her self managed superannuation fund.

Her daughter decided to pay the death benefit to herself and this decision was challenged by Mrs Marsella’s second husband. The simplest way for the trustee of a SMSF to retain an illiquid asset is to pay the death benefit in the form of a pension with the asset used to support the pension. As noted above, however, this will depend on the trustee’s ability to pay the death benefit as a pension. The trustees of her fund were herself and Mrs Wareham. Upon her death, the death benefit payable from the fund was $45416.

Mrs Marsella did not leave a binding death benefit nomination (BDBN) upon death, but did leave a will appointing Mr Marsella as executor. This can be achieved either through a nomination made within the Member’s SMSF Will or Death Benefit Nomination and will be eligible upon that party’s consent to act as a Replacement Trustee at the time of death.