In my earlier posts Divorce and Self Managed Super Fund – Part 1 and Part 2 I have described two potential situations that could eventuate if you decide to split with your spouse with whom you share a Self Managed Super Fund. From the beginning, those are:
- to do nothing and keep operating the super fund with that person and pretend as if nothing happened or
- one person rolls their money out and the other keeps it going.
My final and perhaps most obvious remaining option is winding up the SMSF
Winding up the SMSF
Closing or winding up the super fund implies that each spouse goes their separate ways and member balances are rolled over to new super funds. The basic process involves:
- Realise or value all assets (keep in mind that illiquid assets such as term deposits or property could hold the process up)
- Pay any outstanding fund expenses
- Adjust the member accounts accordingly (including any super splitting)
- Roll out member benefits
- Address any residual liabilities and payments
- Make any final distributions
An important thing to remember is the requirements to retain records after the fund has been wound up. The table below outlines how long each record needs to be kept.
This also poses the question as to which person will be responsible for keeping these records and whether ex-spouses would trust one another to do this.