A recent case has highlighted that it may not be necessary to use a deed to effect a change in trustee of an SMSF. However, the mere fact that not using a deed resulted in a costly legal dispute highlights why using a deed can be the best means of changing trustees.
The trustee of an SMSF (comprising a father and his daughter) tried to remove the daughter as trustee, and appoint a new trustee (being a father’s de facto partner) by means of minutes of in April 2017, the father made a binding death benefit nomination (BDBN) in favour of his de facto partner. A backdated ‘change of Trustee Deed’ was also made around the same time.
Subsequent to the father’s death, the daughter claimed that the changes to the trustees of the fund were invalid (and challenged the BDBN)
The supreme Court looked at the trust deed of the fund, and noted that, although a deed was not necessary to change trustees, the ‘appointment or removal of a trustee must be in writing and must immediately be advised to any other trustee’
The court then had to consider whether the minutes of meeting satisfied this requirement.
Unfortunately, the minutes has been drafted poorly (e.g., they recorded that the trustees had “decided to remove” the daughter, not that she had been removed, nor that the trustee has accepted her resignation) but the court ultimately accepted that the minutes met the requirements of the trust deed.
Also, as all of the parties has signed these minutes, the Court held that this meant they had each received notice of the appointment and removal, as required by the deed.