Case Study: Strategic Leverage Unlocks Seven-Figure SMSF Extraction

Case Study: Strategic Leverage Unlocks Seven-Figure SMSF Extraction

Evahan recently acted as a behind-the-scenes adviser to a member and former trustee of a Self Managed Superannuation Fund (SMSF) in Australia—one riddled with breaches, ambiguity, and trustee misconduct.

The fund, originally formed through a business partnership, had devolved into a one-man operation. The remaining trustee was treating the fund like a personal ATM, ignoring compliance obligations and stonewalling financial transparency. The member—at retirement age—was owed a substantial entitlement but had no access, no leverage, and no legal clarity.

Tactical Intervention

Evahan didn’t enter the fray as counsel.
Instead, we operated quietly—crafting correspondence, framing leverage, and guiding the member through a maze of legal inertia. His lawyer, initially dismissive and emotionally reactive, nearly severed the relationship. But when the letters we ghostwrote began landing blows, the tide turned.

The breakthrough came when the fund’s asset needed to be sold. That moment created leverage. And with strategic pressure, the member extracted his rightful entitlement—a seven-figure sum.

The Bigger Problem: SMSFs in Disarray

Even SMSFs involving family members aren’t immune.
•     Divorce? At least the Family Court has sweeping powers to force asset liquidation or division.
•     Business breakdowns? No such circuit breaker exists.
•     Non-family trustees? It’s a legal and emotional minefield.
•     Family bust-ups? Just as dangerous.

When a daughter stops speaking to her father, or two brothers have a falling out, the fund doesn’t dissolve itself. The law did one thing right: it capped SMSFs at six members—a move designed to contain complexity. But even within that limit, dysfunction thrives.

How the Member Limit Works

Why the Limit Matters

•     Flexibility: Adult children or multiple partners can now join a single fund
•     Cost sharing: Audit and admin costs can be spread across more members
•     Complexity: More members mean more opinions—on risk, investment, and control
•     Fragility: The more people involved, the more likely someone stops talking, starts litigating, or simply refuses to cooperate

 The Liquidity Trap: When Exit Isn’t an Option

SMSFs often hold illiquid assets—property, private equity, legacy business interests. That’s fine when everyone’s aligned. But when one member wants out, the fund can become a prison.

Take this scenario:
•     The eldest son has a falling out with the family
•     His contribution balance is $475,000
•     He wants to roll it into a retail super fund and sever ties

But the SMSF owns a $3 million property.
Unless the asset is sold, partitioned, or refinanced, there’s no way to release his share.
And here’s the kicker:
Refinancing is rarely an option.
Super funds can’t borrow money unless under strict limited recourse borrowing arrangements (LRBAs)—which are complex, regulated, and often unavailable for legacy assets.

Retirement Pressure

Even without conflict, liquidity becomes a problem.
•     Mum and Dad, now 72, want to retire in Portugal
•     They need to cash out
•     The kids want to hold the property

Result? Forced sale.
Because SMSFs don’t allow partial withdrawals from illiquid assets.
There’s no “just give me my share” button.

Strategic Opportunity

SMSFs are not just investment vehicles—they’re governance structures.
Liquidity planning must be embedded from day one.
Extraction pathways need to be legally and operationally mapped, especially for property-heavy funds.

Evahan doesn’t just advise on compliance.
We architect extraction.
We diagnose dysfunction.
We help members get out—with dignity, leverage, and their rightful share.