With the government likely to have one last crack at passing the six-member SMSF bill when Parliament returns, SMSF trustees who are planning to take up the new measure once it is passed have been reminded that they may need to make adjustments to their trust deed or company constitution.
Speaking to SMSF Adviser, Heffron SMSF Solutions head of customer Meg Heffron said that some SMSF trustees, if they want to extend the number of members, may be forced to move to a corporate trustee structure because of the restrictions on the number of individual trustees permitted in certain states.
While a corporate trustee will make it much easier to add additional members in most cases, SMSFs should also be aware that they may need to update parts of the company constitution for the corporate trustee, she said.
“Sometimes a company constitution, if it’s a special purpose company, is deliberately written so that it can only be the trustee of an SMSF, and sometimes the constitution goes a bit too far and says things like you can only have four directors and all the directors have to be members of the super fund,” Ms Heffron explained.
“A more modern constitution won’t, but some of the older ones do.”
One of the other aspects in general that SMSFs should be aware of, she said, is that the change in requirements in the draft legislation that require at least half of the directors or individual trustees must sign off on the fund accounts, she said.
“At the moment, you only need to have two, which makes sense, because it’s always going to be more than half, unless you’ve got a situation where you’ve got an enduring power of attorney for one of the members or something like that,” she noted.
“However, some trust deeds may be prescriptive there and while that won’t necessarily mean they need to update their trust deed, the members should be aware that more people need to sign than what the trust deed says.
“The law will be stricter than the trust deed because you’ve now got six people and more than half have to sign, but the trust deed won’t say that.”
