A sector specialist has confirmed there is no restriction on the number of executors that can be appointed as a director or directors of a corporate trustee in place of a deceased member.
To this end, Accurium technical superannuation adviser Jason Hurst was specifically referring to a situation where an individual is the sole member of an SMSF and passes away with his two children named as his executors.
“Section 17A(3)(a) [of the Superannuation Industry (Supervision) Act] doesn’t say anything about the number of executors [that need to be appointed upon the death of a member]. It doesn’t say if there is more than one, they all have to be appointed or only one of them has to be appointed,” Hurst told attendees of the latest Accurium technical webinar held today.
He pointed out this fact is supported by other guidance the ATO has published.
“There is [Self Managed Superannuation Funds Ruling] 2010/2 that provides some clarity around this section and that confirms we don’t need a one-for-one replacement. So if we had one director to start with, we’re not restricted to have one replacement [when that person passes away],” he noted.
“So subject to the [SMSF trust] deed and the [corporate trustee] constitution, super law would allow both [children in the above scenario] to be appointed as directors because they are both executors.
“[It means] they could either both be appointed or perhaps if only one of them wanted to take on the role and the other was happy with that, maybe one of them could be appointed.”
According to Hurst, emotional factors should be considered in these situations as well.
“If there was likely to be friction or strained relationships, then maybe it would be better if they were both appointed, but certainly they don’t have to be under super law,” he noted.
