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.
The LPR can continue in the role until the accumulated benefits of the deceased member begin to be paid as a death benefit.
After the death benefit starts to be paid, the LPR must resign as trustee and the fund's trustee structure must meet the ordinary requirements of section 17A of the SIS Act.
Generally speaking each adult member of an SMSF must be either a trustee in their individual capacity or a director of the corporate trustee company. Under superannuation law, in order to be a compliant single member SMSF:
Under superannuation law, the surviving trustee has a 6 month grace period from the date of retirement of an LPR to take the steps necessary to prevent "structural non-compliance" and restructure an SMSF following the death of a trustee.
If an LPR does not act as trustee on the death of a member, the fund's surviving trustee must restructure the SMSF to meet the ordinary requirements of section 17A of the SIS Act within 6 months from the trustee's death.
In some cases, the Trust Deed must be amended if a corporate trustee will be replaced by individual trustees, or vice versa.
If such a change is required, the trustee will need to be mindful that:
You can now use Cleardocs to create the relevant documentation to effect a change of trustee where a trustee of an SMSF has passed away, in circumstances where a new trustee must be appointed.
The Cleardocs package can be used for any SMSF, irrespective of whether it currently has a Cleardocs trust deed or some other form of trust deed, where the death of a member has resulted in a 'structural non-compliance' issue for the SMSF.
For more information, contact Maddocks on (03) 9288 0555 and ask to speak to a member of the superannuation team.
You can read earlier ClearLaw articles on a range of matters.
Kate is a lawyer in Maddocks General Commercial Team. Kate joined the firm in 2010 as a paralegal and was admitted to practice in December 2012.
Kate has been involved in acting for a range of commercial, government and professional industry clients.
Her areas of expertise include:
The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.