SMSF trustees – individual or corporate When you set up your SMSF, you need to decide
on the type of trustee for your fund. Your fund can either have individual trustees;
or a company as the trustee of the fund. Whichever choice you make, each SMSF member
must play an active role in managing the SMSF because:
• With individual trustees, all members must be trustees
• And with a corporate trustee, all members must be directors of the company. So which type of trustee will suit you best?
Lets have a look at some of the differences: If you are the only member of your fund – you
still need two individual trustees – so you plus one other person who is willing to
be a trustee and not a member. If you have a corporate trustee – you can
be the single member and the sole director of the company. Ownership of fund assets must be recorded
in the name of all trustees on behalf of the fund. For individual trustees – every trustee’s
name must be listed. So if a member leaves or joins the SMSF, you’ll have to change
the ownership documents. For a corporate trustee – only the company
name is listed – so even if there is a change in SMSF members, you won’t have to change
the ownership documents. Whichever way you go – there are costs and
fees involved in setting up an SMSF. It may cost a bit more to set up a corporate trustee
but, that might be a small price to pay compared to the cost and effort involved in changing
ownership documents. If your SMSF breaks the super rules – each
trustee can be fined thousands of dollars. If you have individual trustees, this will
cost more in fines because each individual trustee is fined the penalty. If you have
a corporate trustee, it only receives one penalty and the directors share the cost between
them. It’s a good idea to discuss the advantages
and disadvantages of both types of trustee structures with your SMSF adviser before you
establish your SMSF. For more SMSF information take a look at our
other videos – or visit the ATO website at www.ato.gov.au