Self Managed Super Funds Require Corporate Trustee

Posted by: Kylie Wilson 

Why it is essential to have a company as trustee (not individuals)

The benefits of having a corporate trustee, rather than individual trustees, can be summarised as follows:

Corporate Trustee	Individual Trustees
Continuous succession A company has an indefinite life span; in other words, it does not die.  Therefore, a corporate trustee can make control of an SMSF more certain in the circumstances of the death or incapacity of a member.	Ceases upon death If the SMSF has individual trustees, e.g. a mum and dad SMSF, then timely action must be taken on the death of a member to ensure the trustee/member rules are satisfied.  (SMSF rules do not allow a sole individual trustee/member SMSF.)
Administrative efficiency When members are admitted to, or cease, membership of the SMSF, all that is required is that the person becomes, or ceased to be, a director of the corporate trustee.  The corporate trustee does not change as a result.  Therefore, title to all the assets of the SMSF remains in the name of the corporate trustee.	Extra and costly paperwork To introduce a new member to an SMSF with individual trustees requires that person to become a trustee.  As trust assets must be held in the names of the trustees, this will require the title to all assets to be transferred to the new trustees when a member is admitted to or exits the fund.
Lump sums and pensions An SMSF with corporate trustee can pay benefits either as pensions or as lump sums.	Lump sums only payable on commuting pension The SMSF rules require that a lump sum can only be paid by commuting a pension, which gives rise to extra paperwork.
Sole member SMSF You can have an SMSF where one individual is both the sole member and the sole director.	Sole Member SMSF A sole member SMSF must have two individual trustees
Greater asset protection As companies are subject to limited liability, a corporate trustee will provide greater protection for the directors where a party sues the trustee for damages.	Less asset protection If an individual trustee suffers any liability, the trustee's personal assets may be exposed
Administrative Penalty Regime Corporate Trustee - one penalty, directors jointly and severally liable e.g. Breach of subsection 65(1) of SIS Act - $10,200 penalty	Administrative Penalty Regime Individual Trustees - one penalty for each trustee e.g. Breach of subsection 65(1) of SIS Act - 4 trustees - $40,800 total penalty: $10,200 each

 

For further information on the issues raised in this news article please contact our senior expert in this area of law, Kylie Wilson on 07 3234 3102 or email  to discuss.

Drought Declared in South East Qld - Drought Assistance Available

Posted by: Kylie Wilson

 South East Queensland is now drought declared.  The State Government has confirmed that primary producers in the south east corner may qualify for drought assistance after the area was declared drought-stricken from 1 August.   For more information please see the attached media statement from the Minister for Agriculture, Fisheries and Forestry.

Qld Drought Map 1 Aug 2014

Media Release - Minister for Agriculture, Fisheries and Forestry

 

News from the North

Posted by: Kylie Wilson

I've just returned to Brisbane from a trip to visit clients in North Queensland, flying in and out of Townsville and Mackay.  It's been a few years since I've ventured that far north and the weather was perfect, at least for a trip to visit client businesses.  Sadly for many primary producers the drought continues and visits like this just highlight the pressure on farming enterprises and the flow on effects to the communities that support them.  Fingers crossed for more rain soon, in the meantime I did appreciate the view of Magnetic Island from my hotel room in clear weather!  If we had a visited office up there I think I would have to migrate for the winter…

Producers can apply for Farm Finance from August 16

Posted by: Kylie Wilson

Many of our rural clients, particularly in the beef cattle industry, have had a difficult twelve months thanks to plummeting cattle prices and lack of rain. There may therefore be some interest in the restructure package being offered by QRAA, details of which are in the attached link.  

www.qraa.qld.gov.au

Below is the link the government media statement.

http://statements.qld.gov.au/Statement/2013/8/6/producers-can-apply-for-farm-finance-from-august-16

Can a defective Will be validated?

Posted by: Tony Allen

 We cannot emphasize enough the importance of having a properly prepared and current Will to ensure that your estate is distributed according to your wishes, however, the absence of a properly prepared will may not always be as catastrophic as you might expect. 
In Queensland section 10 of the Succession Act 1981 ["Act"] provides that a will must be in writing, signed by the testator in the presence of 2 or more witnesses present at the same time and signed by at least 2 witnesses in the presence of the testator.  Amendments to the Act in 2006 empowers the Court to dispense with the formal execution requirements for a will 'if the court is satisfied that the person intended the document...to form the person's will' and the document 'purports to state the testamentary intentions of a deceased person '.
In a recent case in which our Tony Allen successfully represented the executors of an estate who applied to the Court to validate the deceased's last will which failed to meet the formal execution requirements.  In this case, the deceased hand wrote and signed a document which she described as her will and then signed the document in the presence of her sister but there wasn't a second witness as required by the Act.  The executors of her estate wanted to ensure that the estate would be distributed in accordance with the deceased's wishes and instructed the firm to bring an Application to the Court to dispense with the strict compliance with the execution requirements.  Justice Lyons found that the deceased intended the document to be her will and made an order that the handwritten document was the deceased's will notwithstanding that it had been signed in the presence of only one witness.
To read Justice Lyons' decision, go to http://www.sclqld.org.au/caselaw/QSC/2014/158.
What this case demonstrates is that sometimes an informal will can be validated by the Court, however, the costs of investigating the circumstances of the informal will and of bringing a formal application to the court when combined with the associated delays in the administration of a deceased estate, clearly demonstrate the importance of having a will properly prepared in accordance with the requirements of the Act.