Internal member conflicts can be avoided in many situations if the individuals involved give more consideration to see if establishing separate SMSFs can achieve the goals for which they are aiming, a specialist superannuation lawyer has said.
Sladen Legal principal Phil Broderick said family members and business partners often enter into a joint SMSF so the fund can hold business real property, but suggested there are alternatives to this arrangement that can still facilitate investing in common assets while providing a structure better equipped to deal with relationship breakdowns.
Broderick revealed there were a range of options available including having two separate SMSFs to invest in a property as tenants in common.
“SMSF 1 and SMSF 2 [could] just buy the business real property as tenants in common and that could be in equal shares or that can be in unequal shares,” he told Self-managed Independent Superannuation Funds Association SMSF Virtual Forum 2020 attendees.
“The unrelated trust or company is [also] very relevant for business partners.
“That way they [would] have a joint investment by the unit trust, but at least from their SMSF point of view they’ve got their own benefits in their own funds and they’re not mixed up with their business partner’s [fund].”
In situations where family members, such as two siblings, are considering setting up a joint SMSF, he said they should consider having separate SMSFs invest in a Superannuation Industry (Supervision) Regulation 13.22C company or unit trust.
“That is relevant for where [there are siblings] because they can’t have an unrelated trust even if it is 50/50 because of the relationship between them,” he noted.
According to Broderick, this option could also be applicable for business partners as well if one of the parties involved wanted a greater than 50 per cent share in the asset to be purchased.