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SMSF Succession Planning

Click here for online SMSF Core Course training – Members’ estate and SMSF succession planning

SMSF succession services

DBA Lawyers offers a range of SMSF succession services which are tailored to deliver sound succession outcomes that are strategically linked to a member’s personal estate plans.

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SMSF Succession Diagnostic Service

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A personalised consulting service to assist clients with their SMSF succession plans, helping them achieve their objectives with as much certainty as possible and minimising future risk of legal challenge.

The scope our engagement generally involves reviewing relevant background facts and source documents; undertaking investigation and research to confirm  issues requiring further consideration; and providing initial oral feedback in a video conference (eg, Zoom) or phone call for up to 1.5 hours.

Death Benefit Payment Deed

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A death benefit payment deed catering for a common succession planning objective for two member funds in a manner that is optimised for the transfer balance cap rules.

The documents ensure that upon death, any account-based pensions being received by a member automatically revert to their spouse up to the spouse’s transfer balance account. The member can then select whether they want any remaining balance to be paid as a lump sum either to a nominated beneficiary or to their estate (LPR).

Binding death benefit nominations (‘BDBNs’)

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Though many of our clients rely on the value-added free template BDBN form provided with the product disclosure statement in our SMSF documentation, some clients wish to have a tailored nomination in place prepared by an SMSF lawyer.

Our tailored BDBN service is recommended where clients have more complicated wishes for their death benefits, (eg, cashing particular interests or allocating assets to dependants or their estate, or implementing child pension nominations).

BDBN disclaimer documentation

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Documentation to disclaim any present or future entitlement to a death benefit arising under a BDBN.
Hardwired SMSF deed and tailored succession documents

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Tailored SMSF and pension documents, including special deeds of variation to provide for restricted non-commutable pensions and other relevant succession documents, to achieve personalised solutions for your clients.
Timely payment of benefits

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An advice service regarding how to achieve a legally effective and timely withdrawal of super benefits (eg, where a member is over age 60) prior to a person’s death.

If appropriate, our lawyers can also assist in preparing documents to record asset transfers from an SMSF to a fund member who has satisfied a relevant condition of release on an ‘as soon as practicable’ basis subject to legal constraints.

Conditional member admission

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Documentation for new member(s) to be ­admitted to an SMSF subject to agreed conditions for cessation of membership.
Exclude potential beneficiariesDocumentation to exclude potential beneficiaries can minimise legal risk where the relationship with potential dependants has soured or ceased, eg, falling out with a family member. Since an SMSF is a trust, the SMSF trustee must generally act appropriately in relation to all potential beneficiaries who may claim a benefit, especially after a member’s death. A potential beneficiary may also seek documentation to undermine the SMSF trustee’s decision to pay a death benefit. We can prepare documents minimising such risks.
Successor director appointment

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Documentation for a nominated person to be automatically appointed as a director of a company upon the loss of capacity or death of the appointing director.

Please note that the DBA Lawyers’ company constitution includes a standard form for successor director appointments.

Why do you need an SMSF succession plan?

Though it is often overlooked, succession planning is a critically important aspect of successfully operating an SMSF. Every SMSF member should develop, implement and regularly review a personal succession plan to ensure there is a smooth process in place for succession to control of the fund and other succession arrangements appropriate for their individual circumstances. This may include a BDBN, automatically reversionary pensions or other strategies.

SMSF succession planning broadly aims to ensure:

  • that the right people receive the intended proportion of SMSF money and assets; and
  • that the right people gain control of the SMSF to make certain that superannuation benefits are paid as intended

Right Assets - RIght Person - Right Time

An optimal SMSF succession plan should provide for these outcomes in a timely fashion, with minimal uncertainty and in as tax efficient manner as possible. However, it should also be recognised that trade-offs may need to be considered, as it would usually be considered preferable that the ‘right’ people receive a benefit and pay tax, rather than the ‘wrong’ people receiving a benefit in a tax efficient manner (eg, without proper planning, a former spouse may end up receiving death benefits when this was not intended).

There is no easy ‘one size fits all solution’ for SMSF succession. However, SMSF succession planning should ideally consider matters such as the following:

  • determine the person(s) or corporate entity who will occupy the office of trustee upon loss of capacity or death (we strongly recommend a sole purpose corporate trustee — click here for more information on the advantages of a DBA Lawyers company);
  • for a corporate trustee, determine who the directors of the SMSF trustee company will be (ie, who will have control of the company) upon loss of capacity or death;
  • ensure the SMSF can continue to meet the definition of an SMSF under s 17A of the Superannuation Industry (Supervision) Act 1993 (Cth) (‘SISA’) with respect to future developments such as the loss of capacity or death of members, or minor members reaching age 18;
  • determine what each member’s wishes or binding instructions are for their superannuation benefits;
  • determine to what extent each member’s wishes or binding instructions should be ‘locked in’ through the use of an automatically reversionary pension, BDBN or a specially tailored deed, etc;
  • determine the tax profile of anticipated benefits payments (eg, where there is no surviving spouse and benefits comprising a taxable component are to be paid to non-tax dependants); and
  • ensure the SMSF succession plan is consistent with the person’s will, power of attorney and other personal estate plans.

Many people have outdated, inappropriate or no SMSF succession plan that may result in considerable future uncertainty arising, with the control of the fund and the ultimate payment of their super benefits.

SMSF deed

DBA Lawyer’s SMSF deed has been prepared with a view to smooth SMSF succession planning by providing flexibility for:

  • a person’s executor to become a trustee/director in place of a deceased member;
  • 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 has lost legal capacity; and
  • a member’s interests to be managed by their executor/attorney following their death/incapacity. Typically, the SMSF members wield ultimate control and can hire and fire a trustee. Thus, it is important that the governing rules provide protection for members if they become incapable or die.
  • Many other value-added strategies that other SMSF deeds do not provide.

For more reading that explains some of the strategic reasons why our SMSF documents are so highly regarded, click on the articles listed below:

Click here to order a new SMSF or click here to update the governing rules of an existing SMSF.

Company constitution

DBA Lawyers’ company constitution has also been prepared with a view to smooth succession planning in providing 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;
  • a mechanism whereby voting can be managed by giving one or more shareholders greater voter power and/or veto rights, rather than being based on the number of directors or shares held;
  • successor directors and value-added template — a director can appoint one or more successor directors to step in as directors on the incapacity or death of the director. A template successor director form is provided with every company for no extra charge. Few to no other companies allow for successor directors or provide the documents to implement them; and
  • Many other value-added strategies that other constitutions do not provide.

We believe we have the best company constitution and related company documents in Australia especially for SMSFs and we refer you to following articles for further information:

Click here to order a new company or click here to update the constitution of an existing company.

SMSF documentation

DBA Lawyers’ SMSF and company succession service is the best available as our documentation has many advantages over our competitors.

Our service standard gives you peace of mind that expert SMSF lawyers who handle SMSF and succession planning matters on a daily basis will prepare documents that provide a secure foundation for your SMSF succession plans.

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