The separation of spouses who are members of the same SMSF and subject to splitting orders as a result does not mean one party must leave the fund from a legal standpoint, a technical specialist has said.
“There’s no requirement under any of the splitting laws that [says] you actually have to leave the fund other than the reality that in most instances if the relationship has broken down, then the likelihood of [either party] wanting to remain members of the self-managed superannuation fund is fairly minimal,” SuperGuardian education manager Tim Miller told attendees of a technical webinar held yesterday.
To this end, Miller acknowledged there are certain circumstances, even though they are very rare, where separated spouses have stayed members of the same SMSF.
“I have seen one self-managed super fund where the members remained [in] the fund post-separation in a genuine separation situation. That was largely because they were maintaining and operating a business still together and they had property assets of that business inside the superannuation fund, and they felt that while they were accumulating [wealth] and paying those benefits that it was suitable for [both of] them to remain in that fund,” he revealed.
Further, he suggested it is not only the non-member spouse involved in the separation proceedings who has to evaluate whether to remain in the existing SMSF.
“[If] they’ve gone through this entire process, and it’s a little bit the same whether it’s estate planning or a marriage or relationship breakdown, [the remaining member has to ask] is a self-managed super fund then the right [retirement savings] vehicle for [them still],” he advised.
According to Miller, certain factors will usually determine the final decision that is made in this situation.
“Often the assets will be the determining factor in that decision and also whether or not they’ve got the capacity to remain as trustee of the fund now that they are in a different environment to what they were doing previously,” he said.
“I think that becomes a critical issue, particularly if the [fund] balances have been significantly drained from the actual [splitting] transactions.”