It’s a sad reality that one third of all marriages end in divorce. When an SMSF is involved, property settlements can get complicated. What happens when you have to advise both parties in a divorce situation? Fair representation is a tricky balance to maintain.
EACH Trustee is Responsible!!
Consider the case where a separating couple's SMSF fund is being audited. The husband made all decisions for the fund and the wife has signed documents in blind trust for years without understanding the implications of the decisions she was authorising. With little or no knowledge of what the fund was doing, the legal ramifications or even that she was legally responsible as a trustee... is she still liable for the legal ramifications!?
Ignorance is No Excuse
Too often “silent spouses” view the family SMSF as a savings fund that they are a beneficiary of, without also giving due consideration to the responsibilities that come along with the benefits. Each trustee is liable for the compliance of the Fund. When the Fund is non-complying, ignorance is not an excuse and the penalties for a non-complying fund are onerous.
Full Awareness, Full Compliance... for All Parties
At Saul SMSF, we believe it is our responsibility as the Auditor to remind Accountants that all trustees – including the “silent” spouse – are responsible for their SMSF's compliance. Full awareness of trustees is essential. This way, we can to work together to take corrective action to prevent the fund from becoming non-compliant and prevent an unsuspecting member from falling victim to activities she doesn't fully understand.
So what are your responsibilities as an Accountant and ours as an Auditor in SMSF divorce scenarios? Are there situations in your SMSF client portfolio where you need to proactively address issues on behalf of all fund members?
Saul SMSF is a quality audit practice that takes professional care of all parties in a Fund. Contact us if you would like more information.