Future disputes over death benefit payment decisions could be prevented if trustees were to rethink having multi-member SMSFs, a legal expert has said.
Cooper Grace Ward associate Alexander Hawkins said a spike in the number of disputes regarding death benefit payments was caused by multi-member SMSFs where members no longer got along and potential complications could be averted if trustees considered having funds with fewer members.
“The first question is: do we need to have the entire family in this fund, do we need multiple members?” Hawkins said today during a Cooper Grace Ward webinar.
“That’s obviously going to be a question for you and the estate planning practitioner.”
He also highlighted the terms of the trust deed for SMSFs and the need to ensure provisions, such as disclosure obligations, were in place to avert the possibility of a dispute between members over death benefit payment decisions.
“The next issue is the terms of the trust deed. Can the trust deed help us to resolve these problems? What additional provisions could have been put in the trust deed to prevent these problems from occurring in the first place?” he said.
When setting up a trust deed, some thought should also be given to the potential removal of trustees, he noted.
“If a dispute does arise in the future, can we put in place a provision that allows for the easy removal or resolution of some of these disputes?” he added.
In July, Abbott & Mourly national practice director Tony Anamourlis said members looking to nominate someone other than an immediate family member as a beneficiary should consider nominating their estate as a death beneficiary to ensure they can secure available tax benefits.
Last year, Hill Legal principal and senior lawyer Chris Hill said trustees appointed under an enduring power of attorney would remain in the role unless the SMSF trust deed terminated their role, meaning they could direct death benefits to any party including themselves.
