Styles of Self Managed Superannuation Funds

There are three different styles of Self Managed Superannuation Funds that we can assist you to set up. Each is appropriate for certain needs. The different styles available are:

Individual Trustee Funds

Where SMSF have individual trustees all members of the fund must be trustees. While the use of individual trustees removes the additional costs of maintaining a corporate trustee it also does not provide the advantages of corporate trustees. Difficulties can arise in various situations including where one member dies, where members experience a marriage breakdown, where a member leaves the fund, where a member changes their name or where an additional member (such as an adult child) joins the fund later. Fund members are advised to consult their financial advisor for specific advice if they wish to set up individual trustees.

Corporate Trustee Funds

Corporate Trustees require the establishment of a Special Purpose Company (‘SPC’) to act as the Trustee and manage the affairs of the SMSF. All members of the fund must be Directors of the SPC. While there are additional costs involved in maintaining an SPC the following advantages apply:

  • The corporate structure provides limited liability for trustee directors, which is important in the event that litigation against the trustee occurs
  • Assets must be in the Trustee’s name and as trustees may come or go it is much easier to change the name of the directors of the corporate trustee rather than having to issue a deed of amendment and changing the names on all the investments when a trustee leaves
  • If a new member joins the fund (and must then become a Trustee) all assets in the name of the original trustees would need to be updated to include the new member
  • Individual trustee funds must have providing pensions as their sole purpose. This may not be in keeping with a member’s desire to claim a lump sum benefit
  • Estate planning reason particularly regarding the payment of rebatable pensions
  • Support for single member funds

Single Member Funds

It is also possible to have an SMSF with only one member. While exceptions are possible, the yourSMSF preferred method of providing Single Member SMSFs is through a corporate trustee.

A Single Member SMSF which is administered by yourSMSF will generally have the following characteristics:

  • Be established with a corporate trustee using an SPC with a sole director being the single member, or
  • Be established with a corporate trustee using an SPC with only two directors where the member director is not employed by the other director or the member director is related to the other director of the SPC.