STRATEGY
Heading off member conflict
The interaction between SMSF members can sometimes result in conflict. Rob Lavery examines this issue and courses of action that can be taken to avoid these situations.
ROB LAVERY is senior technical manager with knowIt Group.
The rules governing the membership of an SMSF are fairly straightforward – all members must be trustees or directors of the trustee company if the fund has a corporate trustee. The rules are slightly different for single-members. It is the simplicity of an SMSF’s governance structure that leaves it uniquely exposed to the very human issue of conflict. With the prospect of six-member SMSFs once again on the legislative agenda, the likelihood of conflict between trustees is only increasing. So why is conflict likely to arise between SMSF members and how can members and their advisers set up SMSFs to minimise the risks?
Conflict often arises from issues outside the SMSF It is common for conflict that arises in an SMSF to originate from issues between the trustees outside the fund. From this standpoint, an SMSF created as an extension of an existing relationship, such as one based around a jointly held business, is often more prone to conflict between the fund’s trustees.
Dunstone v Irving In the Victorian Supreme Court case of Dunstone v Irving, a dispute between the fund’s trustees had Continued on next page
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