When family members are involved, self-managed super funds (SMSFs) can be vulnerable to disputes and unfortunately be difficult to avoid and work through should they emerge.
Such disputes can be triggered by a range of factors including relationship breakdowns between parents and siblings when in a member/trustee relationship or due to a simple, fundamental difference in opinions.
Investment strategy disagreements can cause a lot of confusion and frustration between members of a SMSF and when it comes to payouts, there can also be many disputes surrounding the distribution of death benefit payments between surviving members.
In order to avoid any potential disputes surrounding an SMSF, it is critical that members consider the following methods as a guideline:
1. Clear decision making procedures.
Money is unfortunately a root cause of many arguments even between very closely bonded family members. By having concise decision making provisions put in place at a time when no disputes have yet to emerge, then boundaries are immediately put in place to protect the wellbeing of all involved.
By making these clear decision making procedures available and understood by all, at everyone’s earliest convenience, then potential issues can immediately be ironed out during a period of lower emotional volatility to ensure that procedures are kept fair for all.
For example, trustee decisions can be a majority rule rather than a unanimous decision and should there be a deadlock, a particular trustee can be appointed to cast a deciding vote. In addition, voting rights can be based on the value of a member’s account balance on a factor of percentage, to ensure those members with minority interest cannot out-vote those with larger contributions.
2. Keep reevaluating, keep updating.
In order to prevent any unwanted beneficiaries and claims, it is essential that SMSFs and trustee information is kept up to date. Unfinalised divorces or changes to a relationship status that have not been legally confirmed will mean that those connected to a member will be able to benefit from their former spouse’s superannuation death benefits.
By simply being proactive about the processes and the information kept in a SMSF, then you are able to avoid any potential disputes that may arise throughout the course of the fund’s lifetime.
Here at Glance Consultants in Australia, we understand that a family member’s situations are constantly changing and we seek to provide tools for our clients to ensure that such changes do not have a negative impact on everyone’s financial health and future.
Contact our friendly team of trusted advisors on 03 98859793 or at enquiries@glanceconsultants.
