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Re: adding trustees

Newbie

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My wife and myself have our SMSF. We are the only members and the trustees. It is not a corporate trustee. It has been running since 2007 and been in pension mode since 2009. ie. no further contribution made. I am the one making the funds investments, which mainly consists of cash, share and option trading, bonds and some gold. It has been producing an income over the years, enough to cover for the required pension payments. The wife doesn’t have the interest in dealing with the day to day running of the fund. As time goes by, I can see myself losing interest as well. So, my question is:

As our son and daughter are the executor of our wills, is it possible to invite them to become trustees [with no financial interest) to our fund? As I lose interest, one of them could take up my duties and run the day to day dealings of the fund, arranging accountancy and auditing for tax purpose and ensuring that the fund makes the income one would expect.

The reason being, should either of us die and the fund can’t exist with one member only, the fund could carry on to function, with son and daughter doing the day to day duties. This could carry on until the death of the last member, when the fund would be wound up.

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Most helpful response

Devotee Registered Tax Practitioner

Replies 0

As our son and daughter are the executor of our wills, is it possible to invite them to become trustees [with no financial interest) to our fund? As I lose interest, one of them could take up my duties and run the day to day dealings of the fund, arranging accountancy and auditing for tax purpose and ensuring that the fund makes the income one would expect.

 

Possible, but only under one of the exceptions described here:

https://www.dbalawyers.com.au/smsf-compliance/the-trustee-member-rules-explained-part-1/

 

The ownership of fund assets must show the names of all trustees, so there is time and cost involved in changing ownership every time a trustee name is added or removed.

 

The reason being, should either of us die and the fund can’t exist with one member only, the fund could carry on to function, with son and daughter doing the day to day duties. This could carry on until the death of the last member, when the fund would be wound up.

 

Best way to enable this is to have a company as trustee, because "trustee changes" are simply changes of director.

This means that registered ownership of the assets does not have to be changed each time there is a person added or removed.

 

1 REPLY 1

Most helpful response

Devotee Registered Tax Practitioner

Replies 0

As our son and daughter are the executor of our wills, is it possible to invite them to become trustees [with no financial interest) to our fund? As I lose interest, one of them could take up my duties and run the day to day dealings of the fund, arranging accountancy and auditing for tax purpose and ensuring that the fund makes the income one would expect.

 

Possible, but only under one of the exceptions described here:

https://www.dbalawyers.com.au/smsf-compliance/the-trustee-member-rules-explained-part-1/

 

The ownership of fund assets must show the names of all trustees, so there is time and cost involved in changing ownership every time a trustee name is added or removed.

 

The reason being, should either of us die and the fund can’t exist with one member only, the fund could carry on to function, with son and daughter doing the day to day duties. This could carry on until the death of the last member, when the fund would be wound up.

 

Best way to enable this is to have a company as trustee, because "trustee changes" are simply changes of director.

This means that registered ownership of the assets does not have to be changed each time there is a person added or removed.