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CFL Financial location Level 9, 360 Queen Street Brisbane, QLD 4000
fax CFL Financial 07 3328 8999
phone CFL Financial 07 3328 8988
Email CFL Financial mail@cflfinancial.com.au

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Succession planning for SMSFs

Posted on Nov 23, 2016 by CFL Financial

A mandatory component of managing a self-managed super fund (SMSF) is planning out what will happen to the fund if its trustee was to pass away.

While succession planning may not be one of the first responsibilities that comes to mind when managing an SMSF, it is a necessity that can provide certainty and peace of mind for a deceased trustee’s family.

It is also especially important in cases where one trustee, for example, a husband, takes a more active role in the management of an SMSF than his wife and fellow trustee, and wants to reduce any potential burdens involved in the fund’s administration and compliance if he was to pass away.

Succession planning can become quite complex if little or no attention is paid to it on an ongoing basis, but there are ways trustees can ensure the best outcome for both the fund and their family.

One option for a sole member fund is to appoint another trustee. Please note that the non-member trustee cannot be the employer of the member unless they are related. This would not be an option for a fund with two members as the available exemptions only apply to single member funds.

Those who appoint a family member or close friend must consider first whether they are suitable for a role; running an SMSF requires expertise and knowledge, and appointing someone with limited experience may not be in the best interest of the fund’s future.

Some SMSF trustees may also choose to appoint an enduring power of attorney. An enduring power of attorney is someone who makes decisions on the trustee’s behalf, if they become incapacitated or pass away. Common power of attorneys include accountants, financial advisors and lawyers; basically those who understand SMSF management and the associated challenges.

Another option is to have a binding death benefit nomination (BDBN) in place. Since a person’s superannuation does not make up part of their estate and is therefore not automatically covered by their Will, a BDBN is often a good solution to help with the distribution of super member benefits.

There are alternative strategies that may be more appropriate than an SMSF, depending on your individual financial situation. As usual any investment decision is best made with the input of an appropriate financial advisor.

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Retirement-in style

Retire in style checklist™

There are a few reasons why Business Owners need a Retire In Style Checklist

If you’re a successful and Motivated business owner, and want to set yourself up for retirement, this guide would be perfect for you. My clients who follow these 3 simple steps live with comfort, security and the peace of mind that financial success brings.

Retirement-prosperity-thumbnail

The Retirement Prosperity Guide™

Make sure you don’t miss out on the Retirement Prosperity Guide

If you’re a busy Professional and you feel like you’re not building your wealth fast enough and you want smarter ways to utilise your cash flow, this guide is perfect for you. Clients who have used our strategies have the peace-of-mind knowing they have a ‘game plan’ for financial abundance.

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Phone: 07 3328 8988
Fax: 07 3328 8999

Office Location:
Level 9, 360 Queen Street
Brisbane
QLD 4000

Postal Address:
GPO Box 2468,
Brisbane,
QLD, 4001

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