How to remove dead Trustees from your SMSF

Removing Trustee and Members from your SMSF

There is a good reason in wanting to share your SMSF with others such as your spouse, children, in-laws and business partners. After all, they are expensive to operate and to have the cost divided by 4 people makes it cheaper.

However, the very close relationship of having all members as the trustees means that you all have to get on together. In Triway Superannuation Fund v ATO [2011] AATA 302 the drug affected child member stole all the Superannuation. The ATO successfully declared the fund non-complying for all the other members as well.

You can’t however just kick out the member/trustee unless they first give their written consent. Regulations 6.28 and 6.29 Superannuation Industry (Supervision) Regulations (Cth) states that a member’s benefit can’t be rolled over to another fund with the member’s written consent. But has for everyone having to act unanimously see here:

Generally the Trustees must act unanimously – so if one of your can’t agree nothing happens: In Dawson v Dawson [1945] VLR 99 the court stated:

Trustees can only act if unanimous, and so no course of action can be decided upon or given effect to unless all then agree that it is desirable. Any attempt by a majority to carry on in defiance of the decision of their co-trustee can be followed by appropriate legal proceedings to ensure that only the unanimous decision be given effect

Justice Street in Sky v Body (1970) 92 WN (NSW) 934 confirmed this by holding:

Inherent in this basic system of trusts is the principle that trustees must act unanimously. They do not hold several offices – they hold a single, joint, inseparable office. If conflicting business considerations lead to such a divergence that the trustes are not able to act unanimously, then the simple position is that they cannot act.

Therefore, on first blush, if SMSF trustees cannot agree, they cannot act.

If you can’t get rid of the person you can apply to the court, but that is expensive and you need a good argument. (The member stealing money is a good argument.)

You can update Trustees, Members and the SMSF Trust Deed all at the same time here.

You can see a full Sample here with our law firm’s Letter of Advice.

If you have any further questions please contact us. We are a law firm so we can give legal advice.

Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
39 Stirling Highway, Nedlands, WA (Post Office Box 5169, Dalkeith, WA 6009)
Mobile: 04777-96959
Direct: 08 6389-0400
Reception: 08 6389-0100
Email: brett@legalconsolidated.com
Skype: brettkennethdavies

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