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I have a SMSF where there were 2 individual trustees both in their late 80s. The husband passed away on 8 July 2021 and the funds have gone to the surviving spouse. Her pension balance is $1.8m and her accumulation balance is $4m.
The brokers have frozen the shares requesting that the shares need to be transferred to the surviving member's name only as the trustees have changed. Shares are held in the name Member 1 & Member 2 as Trustee for The SMSF.
1. Are there any CGT implications if the name on the shares are changed to her name only. I would have though there would be CGT rollover provisions of some sort in a case like this?
2. Is it right of the broker to freeze the account and request a name change?
3. Does there now need to be a corporate trustee set up as there is now only one member.
Thank you for your excellent and very helpful response
Hi Jan
You have raised a number of issues and there are not a lot of details so my answers are general in nature:
1) Normally there would be no CGT implications if a Fund's assets change from one trustees name to another trustees name. There is no change in beneficial ownership (being the Fund as the owner) so there has not been a disposal and no CGT event if the trustees have simply changed).
2) As one of the individuals trustees has passed away yes it is correct that the broker requests that the ownership of the shares be updated. The shares need to remain in the name of the Fund.
3) A single member Fund has 3 options with trustee structure going forward:
i) individual trustees - must be 2 individual trustees (being the member & 1 other)
ii) Corporate trustee - single director (being the member)
iii) Corporate trustee - 2 directors (being the member & 1 other)
(You need to follow the SIS rules re who can be a trustee)
Other issues to consider:
1) Transfer balance account and ability to keep all of the husband's balance in superannuation (as a death benefit pension).
2) Was there a reversionary pension in place?
3) Was there a death benefit nomination in place (if no reversionary pension).
4) Tax implications re husband's pension account.
5) Who is the executor of the husband's estate and what is required re the trustee structure (prior to his death benefit being paid).
Thanks
SMSF AAA