August 21, 2018
Life is unexpected, and being prepared for all aspects of isn’t always possible. Ask yourself, if something were to happen to me or to another trustee within my Self-managed super fund (SMSF), would I have the knowledge or understanding to successfully operate this super fund?
Prepare for the Unexpected
Whether this be illness, incapacity, death or any other turn of events, being on top of your self managed super fund as trustees, before this happens, is vital.
As a trustee within a SMSF, a thought into where you want your superannuation to go on your death is an important step to get yourself prepared. As this is a long-term plan consisting of numerous people, you must also consider all members of the fund and their wishes.
A lot of careful consideration needs to be given to understanding the member’s wishes to ensure that your funds’ trust deed and broader governing rules are drafted appropriately to achieve these requirements.
Legal tools and advice may also aid in this process to help you to direct your superannuation into the right track, by for example, making binding benefit nominations.
If you or another member of your SMSF became unable to act as a trustee, you can appoint an enduring power of attorney to act in the place of the trustee in question. This step should be considered by all members of the fund.
It is important to understand how your SMSF may be affected if one or more fund members decide to leave the fund. By having this conversation with the other members of the fund, this could alleviate any further stress if this was to become the case later down the track.
Stay in the Know
Review your insurance
As a Trustee of an SMSF, you should regularly review your insurance as a part of your investment strategy. Considering whether or not insurance cover should be held by each SMSF member will aid in preparing for unforeseen events.
Administration of your SMSF
If an unexpected event does take place and managing the fund become unmanageable, the closure of this fund may need to be considered.
Financially, an annual SMSF running costs is generally fixed, however if your superannuation balance falls to a level where it is not cost effective to remain in the fund, the best option may be to transfer out of this plan.
Being aware of the financial state of the fund at all times, can combat any financial troubles that you may face if your monetary state was to unexpectedly change.
Need further help?
If all of this is still feeling out of your reach, or you simply have a question or two about the SMSF strategy, do not hesitate to contact Sedley Koschel on 1300 00 11 08 or head to the ‘get in touch tab’ where you can arrange an obligation free, 30 minute consultation.