There are definite financial benefits involved with managing your own Superannuation.
But a recent case has highlighted the need to be thorough with the administration of your Self Managed Super Fund (SMSF).
The case was between an SMSF Trustee who was not fulfilling her trustee roles, and the intended beneficiaries of the SMSF. The trustee at fault was the second wife of her deceased husband, and the intended beneficiaries were the daughters from the deceased husband's first marriage. The daughters eventually received their estate entitlement, though not before a prolonged and costly court case.
The document that "saved" the daughters was a Binding Death Nomination (BDN) completed by their now deceased father, which ruled in their favour.
Normally a person's "Will" does not cover a member balance in an SMSF. The Trustees are able to treat a member balance "as they wish" unless the deceased member has completed a BDN.
When a BDN is in place, the Trustee has no discretion and must treat the member balance as instructed by the BDN.
Your roles as Trustees or "administrators of the fund" are also under scrutiny from the ATO, which is now implementing a penalty regime for Trustees who make errors in fulfilling these roles.
Penalties will be in two forms:-
Fines which can amount to thousands of dollars, or the ATO may also enforce compulsory training courses for Trustees who make mistakes.
To avoid scrutiny please ensure the following:
1. All SMSF expenses are paid from the SMSF bank account
2. If paying pensions, make sure the required minimum pension amount is paid by 30 June. Our office will always advise you of the minimum repayment amount prior to this date.
3. Do not pay excess pensions. Our office always advises prior to 30 June if this applies to you.
4. Make sure all SMSF refunds or income items are banked to the SMSF bank account.
5. Always make any payments to the SMSF from related entities when advised by our office.
6. Always make reimbursements from the SMSF if our office advises.
7. Be careful not to make excess contributions to your superfund. Check with our office prior to contribution if you have any doubts.
8. Ensure you have made an Enduring Power of Attorney so that in the event of incapacity your interests are protected. Make sure you discuss this with your solicitor as a recent situation saw the Titles office refuse an EPOA appointment because it did not specifically cover the appointment of SMSF trustee.
9. Ensure your Executor is aware of your SMSF membership and that they understand their roll to look after your SMSF balance. They will not automatically become your replacement Trustee but will need to be appointed by way of a meeting of the SMSF Trustees.
If you require assistance with any of these important matters please contact the following accountants on their relevant email addresses:
Malcolm Diefenbach Malcolm.email@example.com
Peter Flemming Peter.firstname.lastname@example.org
Ros Schroder Rosalind.email@example.com