What to do if a member wants to leave an SMSF

Self-managed super funds (SMSFs) offer members many benefits, not least of which is a greater degree of control over investments. However, some trustees decide in time that maybe an SMSF – or a particular SMSF – isn’t the right superannuation solution for them.

Sometimes the parting is amicable. But in some cases, divorce, separation or a falling out among fund members may result in a member wanting to leave an SMSF.

Getting closure

There’s a high proportion of closures of SMSFs in any one year. For instance, there were 25,794 SMSFs established in the 2020–21 financial year and 11,452 SMSFs wound up.

There are no statistics on the number of SMSFs where one or more members exit the fund while others stay, but this is also likely to be a fairly common occurrence.

There could be many reasons for members heading for the exit:

• If an SMSF was made up of a couple and their children, there could come a time when their daughter or son may want to leave the SMSF and start their own fund with a new spouse.
• Or perhaps their offspring have just decided they want to put their super into an industry fund instead of their parent’s SMSF.
• Business partners who had started an SMSF together might decide to leave a business and take their super with them.
• A member could move out of the country for a significant period of time and want to leave an SMSF as well.
• When couples divorce.

But what happens if some members of an SMSF want to stay and some want to leave?

What’s involved