More often, the key triggers of disputes within a SMSF include:
- Disagreements regarding investments and investment strategy.
- Differences in opinions regarding the payment of benefits, especially in funds with both parents and children.
- Disputes regarding the payment of death benefits.
- Disagreements between surviving members over the payment of SMSF death benefits received compared with amounts received under the deceased’s will.
When sorting out disputes, the SMSF trust deed will provide provisions which determines the trustees’ rights, obligations and options. Therefore, ensuring the SMSF trust deed has up to-date dispute minimisation provisions can avoid the impact of a dispute.
The provisions may include allowing trustee decisions to be made by a simple majority rather than unanimously or providing a casting vote to a particular trustee in case a deadlock occurs.
Provisions could also include voting rights that are based on the value of a member’s account balance within the fund, which eliminates a member with minority interest outvoting a member with a large fund account balance.
In addition, there should be provisions that deal with situations where disputes cannot be avoided, for example, the deed would require the parties to go to mediation, conciliation and arbitration before going to court. For a SMSF with corporate trustees ensure that similar provisions are contained in the constitution regarding decision making by the directors.
For more information please contact:
Neal Dunne
Director - Wealth Management
P +61 3 9608 0170
E
ndunne@moorestephens.com.au