SMSFs looking to take advantage of the legislative change increasing the maximum number of fund members from four to six may need to switch from having an individual trustee structure to a corporate trustee arrangement, a technical expert has said.
Part of the amended legislation deals with the requirements for the proper approval for the accounts and statements of the SMSF to accommodate an increased number of members in the fund.
“[The amended legislation says] where the fund has individual trustees, if there are only two trustees, then both of the trustees must sign or otherwise at least half of the trustees must sign in that instance,” Smarter SMSF chief executive Aaron Dunn explained during an industry webinar today.
“There are going to be some state-based issues here under the state-based acts in terms of whether they allow for more than four trustees.
“So there is going to have to be further changes in that respect and may require individual trustee funds, if they were to exist to include a larger number of members, having to actually convert to a corporate trustee in that event.”
Should the law be changed to allow SMSFs to service a maximum number of six members, Dunn noted advisers will have to consider an additional number of items that might require revision with regard to the structure and operation of existing funds.
“[It will require some] contemplating what changes you might [need to] be making not only in the deed and the process around the appointment of initial members, but also looking at all those areas of death and dispute, disability and disagreement, and so on and so forth,” he said.
“It is going to become critical into that decision-making process as well as thinking about how voting is to occur and what level of approval might be required based upon two members versus six members.”