Many people have no succession plans for their SMSF on their death or incapacity; especially who takes control of their SMSF. This oversight is a major concern given the large amount of assets now held in the SMSFs and the fact that a surviving spouse may invariably be the main successor who:
- may be in receipt of a reversionary pension and must therefore be a trustee/director;
- may be a member of a blended family or may meet a new partner in life; or
- may subsequently change their will or binding death benefit nomination (‘BDBN’).
A common situation is where a couple may wish to leave the capital in their SMSF to the surviving spouse for life but then may wish to leave any residue to their children from their former relationship on their spouse’s death.
Hardwiring SMSF with succession directions
DBA Lawyers can hardwire succession directions into the SMSF deed (ie, a death benefit rule). The following documents are usually required:
- an appropriate SMSF deed with specific provisions including limits on the surviving spouse’s rights and entitlements;
- an appropriate BDBN; and
- a mutual wills agreement that binds the surviving spouse not to vary their will or BDBN in an adverse manner.
Note that our lawyers can tailor documents to meet your needs. DBA’s
SMSF Deed
DBA’s SMSF deed has been prepared with a view to succession. In particular, they provide the flexibility:
- for a person’s executor to become a trustee/director in place of a deceased member;
- for a person’s attorney acting under an Enduring Power of Attorney to become a trustee/director in place of a member when he or she is in a coma and is legally incapable of acting; and
- provides for a member’s interests to be managed by their executor/attorney following their death/’incapacity. Typically, the members wield ultimate control and can hire and fire a trustee. Thus it is important the governing rules provide protection for member’s if they become incapable or die.
Many other SMSF deeds do not include these powers.
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SMSF Company
DBA’s SMSF company has a constitution prepared with a view to succession. In particular, it provides the flexibility:
- for an executor or attorney acting under an Enduring Power of Attorney to become a director and still remain compliant with the trustee/member rules; and
- for a mechanism whereby voting can be managed by giving one or more a greater vote and/or right of veto, rather than being based on the number of directors or shares held.
Thus DBA’s SMSF documentation already has considerable advantages over many other SMSF suppliers. This provides you with peace of mind that expert SMSF lawyers who handle SMSF and estate planning matters on a daily basis have prepared the important foundations to your SMSF succession planning.
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Other SMSF succession services
DBA also have a range of other services that provides sound succession strategies for SMSFs including:
| Service: | Description: |
| Successor Director Appointment — Click here for more | Provides the documents for a nominated person to become appointed as a director on your incapacity or death. |
| SMSF — Enduring power of attorney — Succession — Click here for more | Provides for a nominated person to become appointed as a trustee/director of your SMSF on your incapacity and provides them the authority to exercise your member’s interests.
This can be used if someone is incapacitated and close to death. |
| SMSF — Enduring power of attorney — Non-resident — Click here for more | Allows you to confer power on someone to act on your behalf as a trustee or director of a corporate trustee of an SMSF. This power is limited to matters relating to the SMSF and does not authorise the attorney to act in any other capacity.
As such, this product is particularly useful for SMSFs who have trustees (or directors of a corporate trustee) residing overseas. It enables such SMSFs to keep their central management and control based in Australia provided the other tax and super rules are complied with. Expert advice should be obtained to correctly implement and maintain an SMSF’s complying status. NB, this power if attorney can be tailored such that it will continue to take effect after the incapacity of the trustee/director. |
| Succession Planning — Click here for more | A complete estate and succession planning service that fully integrates with your SMSF succession planning. |
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