When can’t you change a SMSF trustee?

  • Family Trust - Trustee Update

  • $295 incl. GST

Use a law firm’s website to update SMSF Deeds

You would have thought it was straightforward to change the Trustee of a Self-Managed Superannuation Fund. Not so you if you read Moss Super Pty Ltd v Hayne [2008] VSC 158.

A member died. The surviving member tried to change the trusteeship of the SMSF. She tried to appoint a company. She was the sole shareholder and director of the corporate trustee.

Trust deeds are diverse and often strange. This particular trust deed required that the ‘founder’ had to also approve the change of trustee.

The remaining member was the founder, but she did not sign in that capacity. She only signed as a ‘member’ and sole director of the new corporate trustee.

The Court said while it was a strange requirement to have in an SMSF Trust Deed, since the requirement was there it must be followed. This is even more reason to ensure that you use a law firm’s website to prepare Deeds of Variation. As superannuation lawyers our Deed of Variation to change the Trustee comply with Moss Super Pty Ltd v Hayne.

Greedy second wife vs greedy children

Perry v Nicholson [2017] QSC 163 is another example of where ychange SMSF trusteeou need to be careful as to who prepares your Deed of Variation of your SMSF. In this case, there were two questions:

1. had the trustee of the SMSF been correctly updated?

2. was the death benefit binding nomination valid?

This was another strange requirement set out in an SMSF Deed. The deed required that the Trustee must be shown a copy of the binding nomination. Otherwise, the binding nomination isn’t valid.

The result is: if the change of Trustee is not valid then the binding nomination is not valid.

What happens if the change of the SMSF trustee was invalid? The binding nomination would also fail as it was only shown to the new trustee. If the change of trustee was invalid then the binding nomination should have been shown, instead, to the original SMSF trustee (which was not done).

However, if the binding nomination was valid, the dead man’s second wife gets his superannuation.  If the binding nomination was invalid, the children of the first marriage get the super.

But as luck would have it…

Thankfully, for the second wife, the change of SMSF trustee was effective. This is the case even though the change of SMSF trustee:

1. was not done by way of Deed

2. did not comply with the SMSF Deed

I don’t believe that you should rely on the ‘luck’ of Perry v Nicholson. Instead, build the Deed of Variation to change the SMSF Trustee on our law firm’s website.

Please telephone us if you need help building the Change SMSF Trustee Deed.

Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
Australia wide law firm
39 Stirling Highway, Nedlands, WA
National: 1800 141 612
Reception: 08 6389 0100
Email: [email protected]

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