SMSF members holding crypto-assets within their fund need to create plans that allow their successors to take control of those and be able to access them, with an estate planning lawyer pointing out they are different documents.
WMM Law director Kimberley Martin stated in regards to crypto-assets, SMSFs members should put in place a legal plan that addresses the succession of members in a fund and an access plan that details how their investments are stored and what is required to access and establish control over them.
“The legal plan is something that is not new, but applies a little bit differently to other types of asset classes,” Martin said during a presentation hosted by The Auditors Institute today.
“In this instance, the legal plan may involve reviewing the client’s will, powers of attorney, constitutions and trust deeds. You don’t need to review those documents, that’s something lawyers should be doing, but ask whether or not they have a succession plan and if they have documents in place that appoint a valid successor.
“It should be a requirement upon audit that every SMSF trustee has a power of attorney in place because of the regulations under the Superannuation Industry (Supervision) Act and Regulations, and that is even more important when it comes to crypto-assets.
“We need to have these legal documents in place to authorise successor trustees or directors of a corporate trustee to have control to these types of assets.
“Specific powers or indemnities may be required and clients may require deeds of ownership where the relevant crypto-exchange does not recognise the structure we’re dealing with, for example, an SMSF.”
He noted these documents should never include private keys or passwords and SMSF practitioners should not agree to store them for clients, rather that information should form part of the access plan.
“That plan should focus on three questions. What systems are used to access the assets? Who will assist the fiduciary and where are the access details stored?” she added.
“From a succession planning perspective, we are talking about how are your fiduciaries, your executors, attorneys and successor trustees going to get access to the seed phrase so they can get access to the storage wallet.
“Clients may use multiple wallets and each of those wallets may have different access methods, devices, passwords and recovery phrases, so a separate access plan should exist for each wallet, setting out how they are accessed and what information a fiduciary would need if the trustee died or lost capacity.”
