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I'm looking at a fund where one of the members passed away in June 2022. Up to that point there were two individual trustees. The fund intends to close during 2023. How long does the fund have to restructure or will closing the fund be enough?
Furthermore, the fund has obtained legal advice who said that because the surviving trustee is the legal personal representative of the deceased there is a second individual trustee. It doesn't sound right to me. Any thoughts?
Hi David
Thanks, yes you can have a situation where a trustee acts as an individual trustee and also acts as the second trustee as the legal personal representative for the deceased member.
Re the relevant part of SIS it is section 17A that states:
Certain other persons may be trustees
"(3) A superannuation fund does not fail to satisfy the conditions specified in subsection (1) or (2) by reason only that:
(a) a member of the fund has died and the legal personal representative of the member is a trustee of the fund or a director of a body corporate that is the trustee of the fund, in place of the member, during the period:
(i) beginning when the member of the fund died; and
(ii) ending when death benefits commence to be payable in respect of the member of the fund; or
(b) the legal personal representative of a member of the fund is a trustee of the fund or a director of a body corporate that is the trustee of the fund, in place of the member, during any period when:
(i) the member of the fund is under a legal disability; or
(ii) the legal personal representative has an enduring power of attorney in respect of the member of the fund; or
(c) if a member of the fund is under a legal disability because of age and does not have a legal personal representative:
(i) the parent or guardian of the member is a trustee of the fund in place of the member; or
(ii) if the trustee of the fund is a body corporate—the parent or guardian of the member is a director of the body corporate in place of the member; or
(d) an appointment under section 134 of an acting trustee of the fund is in force."
It is also noted that once the time has occured that a second individual trustee is required as a result of a death of a member (eg. the date at which benefits have been paid out) the Fund has 6 months from that date until it would cease to be a SMSF (refer section 17A(5)).
As an example a SMSF has 2 members Rob & Mary that are individual trustees. Rob dies in June 2022 and Mary as she is his LPR acts as trustee on his behalf. Rob's benefits are all paid to his estate on 31/12/2022. Mary could act as trustee for Rob as LPR until 31/12/2022 when his benefits are paid. The SMSF has 6 months from 31/12/2022 to wind up or it would need to appoint a second individual trustee (or set up a corporate trustee) from this date.
Thanks
SMSF AAA