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Strategy, Succession Planning

SMSF exit strategy gaining importance

Sector regulators have been increasing their emphasis on trustees to consider and perhaps formulate an exit strategy for their SMSF even at the point of establishment.

According to Australian Executor Trustees senior technical services manager Julie Steed, the focus began in 2012 when the Australian Securities and Investments Commission (ASIC) performed a review of advice and highlighted areas of concern regarding SMSFs.

“One of the things that surprised a lot of practitioners was ASIC focused on the need for an exit strategy,” Steed said.

She said advisers needed to take note of that finding, seeing that SMSF exit strategies were just about non-existent.

“I work with some pretty professional, serious, fantastic advisers and when I read the report I sat down and I thought ‘I don’t actually think in all of the statement of advices I’ve ever helped people with, regarding particular sections I’ve helped people with on SMSFs, that I’ve ever seen anyone with an exit strategy in there’,” she said.

“So to think about the best practices I work with, none of them did it, and yet that ASIC had come up with it as such a requirement was surprising.”

That original emphasis on an SMSF exit strategy had now recently been reinforced via the ATO’s educational videos, she said.

“There are actually two ATO videos about SMSF exit strategies and one of them comes in the establishment section,” she said.

“So it’s having that contingency and the ATO being very clear they expect that to be considered by trustees when they establish a super fund.

“The other also quite sensibly comes right at the end, when trustees might need to wind up a self-managed superannuation fund.”

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