Change of SMSF Trustee (death of a trustee)
Is the Change SMSF Trustee package suitable for when the SMSF has a member who is under 18 years old?
The law allows an SMSF to have a member who is under 18 years old. Specifically, where there is a member under 18 years old who does not have a legal personal representative:
- a parent or guardian of the member needs to be a trustee of the fund in place of the member; or
- if there is a corporate trustee, a parent or guardian of the member needs to be a director of the corporate trustee in place of the member.
Is the Change SMSF Trustee (death of a trustee) package suitable for when a director of the corporate trustee has passed away?
If the SMSF has a corporate trustee and the person who has died was a director of the corporate trustee, then you don't need to change the trustee for this reason. However, you can still use Cleardocs to change the SMSF's trustee anyway:
- using the Change SMSF Trustee (Cleardocs deed) document package if the SMSF already has an underlying current Cleardocs deed; or
- using the Change SMSF Trustee (non-Cleardocs deed) document package if the SMSF does not have an underlying current Cleardocs deed.
Should I use the Change SMSF Trustee package when a fund member turns 18?
A person under 18 years old can be a member of an SMSF, but not a trustee. Superannuation law allows a parent or guardian of a member who is under 18 years old to be that member's representative as trustee. When the member turns 18 years old, that member must be:
- if the fund has individual trustees, appointed as a trustee and his or her parent or guardian must retire; or
- if the fund has a company as trustee, appointed as a director of that company trustee.
You can use a Cleardocs Change SMSF Trustee package to retire a parent or guardian representative trustee and appoint the now 18 year old member as a trustee.
You do not need to use the Cleardocs Change SMSF Trustee package to appoint the 18 year old member as a director of the corporate trustee. The appointment as director can occur in accordance with that company's Constitution. However, the 18 year old member must:
- sign a form consenting to his or her appointment as a director of the company; and
- complete the ATO trustee declaration form.
Once the new director has been appointed, an existing director must complete an ASIC Form 484 to notify ASIC of the appointment of the new director.
In all cases, once the changes have taken place to the fund's trustees, the trustees must complete and sign the ATO change of details form for superannuation fund entities. This form is provided with the Cleardocs Change SMSF Trustee packages.
What happens if I die and I do not have a Binding Death Benefit Nomination or Death Benefit Agreement in place for my fund and there is a surviving member of the fund?
If you die and you do not have a binding Death Benefit Nomination or Death Benefit Agreement in place, then the trustee of the fund, most often the surviving member of your fund either as a trustee in their personal capacity or as the sole remaining director of a corporate trustee, will determine how your death benefit entitlement is dealt with.
That trustee of the fund has to notify certain persons regarding the death benefit entitlement. Please refer to our FALQ 'If I am a surviving trustee of a fund which uses the Cleardocs SMSF trust deed product and a member of the fund has died, do I need to notify anyone of the deceased member's entitlement?'
For example, that trustee could decide that your member benefit entitlement is paid 100% to themselves (i.e. the survivor). Or, he or she could decide to pay it to your legal personal representative, being to your estate or to any other dependants. This can be a complicated process if you are dealing with a second marriage or a blended family.
To help avoid these complexities, you can choose that your legal personal representative, being the executor of your will or administrator of your estate, can step into your shoes as replacement trustee/director so that person can make the decision together with the surviving trustee. This would have to be written into your deed.
However, the best way to ensure that your wishes regarding your death benefit entitlement are implemented is to have a Binding Death Benefit Nomination or Death Benefit Agreement in place!
If I am a surviving trustee of a fund which uses the Cleardocs SMSF trust deed product and a member of the fund has died, do I need to notify anyone of the deceased member's entitlement?
Yes, if there is no valid binding death benefit nomination or death benefit agreement in place at the time of the deceased member's death..
You must give written notice that a benefit is payable to the following persons:
- a nominated beneficiary;
- a reversionary beneficiary;
- the legal personal representatives of the member;
- known dependants of the member; and
- any other person that you reasonably believe may have an entitlement or interest in the benefit.
The notice must include how and by what time the person or persons may make a claim for the benefit and following this time you must notify the person or persons you previously notified about the benefit to enable them to object to payment to the person or persons.
Does the SMSF Trust Deed take into account the recent changes in the law related to COVID-19?
Yes, the SMSF Trust Deed has been updated to allow debits from an accumulation account resulting from a COVID-19 Determination (which is a determination issued by the Commissioner of Taxation allowing the early release of super because of the economic effects of COVID-19 on a member).
 Section 17A(3)(c) of the Superannuation Industry (Supervision) Act 1993.