SMSF advisers need to ensure there is nothing technical getting in the way of a client closing their fund, but where any obstacles are still in place they may need to get creative in how they deal with certain problems, according to an SMSF expert.
“The big one, the showstopper, is when you’ve got no trustee. So that might happen because maybe you had a sole director and they’ve passed away, so you definitely need someone to consent and to agree to the wind-up; that’s a high-level decision to be made,” Heffron senior SMSF technical specialist Annie Dawson said during a recent webinar on SMSF wind-ups.
Dawson said in the first instance it may be possible to get the executor on as a director to a corporate trustee if it was the case that a sole director had passed away, and even where a client was still alive, but had lost capacity to function as a director, a new director would have to be appointed.
“Hopefully, they’ve got an enduring power of attorney (EPOA) and we can arrange to get the attorney appointed,” she said.
In some instances, they may not have an EPOA and the public trustee may have to act for that person. However, Dawson pointed out the public trustee may not agree to be a trustee of the fund.
“Certainly, in those scenarios, we’ve had to in the past find a family friend who was willing to be appointed as a trustee or, in that case, a director,” she said.
While a non-member family friend trustee or director may technically be in breach of section 17A of the Superannuation Industry (Supervision) Act, the need for a trustee can override that.
“In that case, we just need someone to come on. We have breached section 17A because the public trustee wasn’t willing to act, but you do need a trustee appointed to be able to [wind up],” she said.
Heffron SMSF specialist Sean Johnston also reminded attendees to leave winding up the corporate trustee to the very end.
“Winding up your trustee, in the case of a corporate trustee, is the absolute last step we do after everything else is done,” Johnston said.
Dawson added: “When I say the trustee has got to be on there till the end, I’m not talking about just to the end of the financial year that you’re doing a wind-up effective of,” Dawson added.
“If it takes a number of months afterwards for the final accounts to get signed, for the final return to get processed, you still need your corporate trustee on board at that point.”
