Superannuation is perplexing enough, let alone when you need to worry about Bankruptcy as well. At Bankruptcy Experts Hervey Bay we often have a lot of people talking to us about what may occur to their super, and if you possess a regulated or industry fund (like most superfunds) then your super is safe, and Bankruptcy will have no influence upon your super. However, if you have a Self-Managed Super Fund then you might discover some problems because there are a number of things you can not do whilst bankrupt surrounding the management of finances.

This is actually a growing concern with a lot of Australians in the last few years; the ATO tells us it has developed Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what occurs to these Superfunds when it comes down to Bankruptcy?

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As I proposed earlier, a fundamental solution to your SMSF problem is to put your super back into a standard regulated managed fund before bankruptcy and save yourself all the problems described above.

Firstly, if you are taking into account Bankruptcy, you can not be a part of a SMSF. Why? Considering that if you are confronting bankruptcy, you will be grouped as a ‘disqualified person’. And a disqualified individual can not operate as an Individual Trustee. This leads to a challenge because typically most of the SMSFs are just 2 people, which means both of these users must also be the individual trustees. The position of trustee sets a great deal of legal guidelines, and if you are in this position I would highly urge you to be aware of them all– as an example the fact that you can not ‘know or suspect’ that one of you are bankrupt. So you can notice how an individual bankruptcy could be quite damaging to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is rather convoluted.

Regardless if you phone us or somebody else it does not matter, just please don’t step into insolvency blind when it comes to your SMSF. In fact because Bankruptcy is so complex with SMSFs we encourage you to get both legal and financial recommendations before proceeding with any one of the actions indicated in this article.

So what takes place if one of the members of an SMSF does enter Insolvency?

For starters, the SMSF will need to be restructured. This means that you will want to think about your entire structure and ensure it is satisfying the basic terms, including points like maintaining a new trustee that is not dealing with problems with Bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ to get this completed before you face punishments. And consider, sometimes the most ideal plan would certainly be to simply roll the fund into an industry or corporate fund.

Beyond these large-scale restructuring challenges, there is a great deal of paperwork to take care of too, and you need to be continuously keeping the ATO updated of what is occurring. This suggests you need to let them know that you have a bankruptcy issue with your current trustee, that they are being eliminated as soon as possible and let them know who the new trustee/director is. The Bankrupt will also need to update the ATO using the form NAT 3036 (Found on the ATO website) and they will need to also notify ASIC of their resignation.

During that 6 month period of time you will need to remove the Bankrupt from the SMSF– including their property and assets. Bear in mind if you are not sure call Bankruptcy Experts Hervey Bay for some complimentary suggestions on 1300 795 575.

What if I use a single member fund?

On the other hand, if you are a single member fund the Bankruptcy will be a little bit diverse because you will need to designate a new director (simply because it can not be you from now on) you are going to need to make a great deal of tough choices with this therefore getting in touch with a specialist is going to be essential. You can easily phone Bankruptcy Experts Hervey Bay for some free guidance on 1300 795 575.

From that you can notice how whenever it involves Bankruptcy, despite the fact that one single member is handling concerns, it can impact the very existence of an SMSF. If you are at this point facing this matter yourself, or with a partner in a SMSF, please get financial advice to make sure you are meeting the ATO requirements.

Bankruptcy is never uncomplicated, but finding appropriate guidance is the best first step. If you wish to discuss your approaches further, contact us at Bankruptcy Experts Hervey Bay or visit our website: www.bankruptcyexpertsherveybay.com.au or just call us on 1300 795 575.