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Changing our SMSF to a Corporate Trustee

Discussion in 'Introductions' started by davewa, 27th Mar, 2012.

  1. davewa

    davewa Active Member

    Joined:
    22nd May, 2011
    Posts:
    40
    Location:
    Sydney, NSW
    Hi all, my first post.

    We have made our minds up that we need to transfer from Individual Trustees to a Corporate Trustee. There's plenty of info out there on the reasons for and against doing this, but I can't find anything on the web about the nitty gritty of how to do it.

    Do I need to completely close the old SMSF and open a new one? or can I somehow merely convert? Will I need to do a tax return for both funds?

    Also would the new Trustee have the same name? (There's the problem of changing the names of term deposits, etc. Maybe timing the change to happen when our term deposit matures would avoid having the bank break our term deposit and hence giving us very poor interest).


    Thanks for all help,
    Davewa (actually we have recently relocated to Sydney)
     
  2. Terryw

    Terryw Well-Known Member

    Joined:
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    Location:
    Sydney
    The new trustee would be a separate entity - a different person. So all assets held by the trust would need to have their names changed on title - bank accounts would need to be changed for example.

    If the fund owns any real property then you will need to get some advice. You should get advice anyway - on company set up, who will be trustee shareholders etc. Succession of the company needs to be considered too.

    First, check your deed and see what needs to be done. Does the deed allow the trustee to be changed? You may have to have the deed amended. if it is more than a few years old it may need to be updated anyway.

    Assuming the deed allows it the trustees of the fund would need to have a meeting and resolve to appoint ZZZ Pty Ltd as trustee and have XX resign. Print out and sign this resolution. The company will also need to have a meeting of shareholders/directors and decide whether to act as trustee and this needs to be recorded in a minute too. Print out and sign and take these resolutions with your deed and company certificate to a bank and open your account.
     
  3. davewa

    davewa Active Member

    Joined:
    22nd May, 2011
    Posts:
    40
    Location:
    Sydney, NSW
    Changing our SMSF to Corporate Trustee

    Thanks for your reply Terryw.

    So we don't need to wind up our SMSF and start a new one? - if that's the case then that's a great relief!

    I had a look at our trust deed. It does allow removal and replacement of trustees, including corporate trustee "in accordance with the SIS Act". We received this trust deed when we set up our SMSF in October 2008 / no updates. (We were panicked into that by the GFC :eek:) Unless our change to Corporate Trustee requires it then otherwise I don't suppose we need a new Trust Deed. Especially our SMSF plans are very conservative and simple, and our current deed allows us to do all that we want, such as adding a new member.

    We are currently 100% in cash, so I suppose timing the new Corporate Trust Deed to start when the term deposit matures would be a good idea. The bank has informed us that any name change during the term would result in the bank breaking our term deposit and paying us lousy interest.

    Any other information or readers' experience about the process would be much appreciated.

    Other readers may be interested in Tony Negline's article "Corporate trustees well worth cost: changing the status of your super fund can reduce the hassles and save you money" last year available at http://www.theaustralian.com.au/business/wealth/corporate-trustees-well-worth-cost-changing-the-status-of-your-super-fund-can-reduce-the-hassles-and-save-you-money/story-e6frgac6-1226077345754

    Thanks and regards,
    Davewa.
     
  4. Terryw

    Terryw Well-Known Member

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    Location:
    Sydney

    A corporate trustee is a good idea, but why do you want to change?
     
  5. davewa

    davewa Active Member

    Joined:
    22nd May, 2011
    Posts:
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    Location:
    Sydney, NSW
    Changing our SMSF to Corporate Trustee

    We want to change to Corporate Trustee to allow our son to join the SMSF. Also as we get older one of us may get fed up with the responsibility and want to leave. Ditto in the case of serious illness or death. I've also read that a Corporate Trustee is more suitable for succession planning.

    It will get harder later on if we were invested in shares or property, so we want to bite the bullet and sort it out sooner, while we don't hold those asset classes.

    Davewa
     
  6. greg999

    greg999 Member

    Joined:
    29th Mar, 2012
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    Location:
    Sydney, NSW
    Hi Davewa, Terryw and forum readers,

    I just found this great forum!

    I also would like to change our family SMSF to a Corporate Trustee, and would like to know more about how to do this too. My Trust Deed includes a page with a schedule detailing name of fund, name of (individual) trustees, etc. Presumably this page and the cover page of the Trust Deed with our SMSF name on it would have to be amended. Does this require a lawyer, or can my accountant amend these items?

    My trust deed does allow change of trustee.


    _______
    Regards
    Greg999