Members must be Trustees

One of the greatest aspects of an SMSF is the level of control you have in tailoring your Fund to meet your own retirement interests. The Members have the sole control and decide how the Fund will operate and what investments the Fund will invest in.

The significant question that comes up after deciding that an SMSF is right for you is choosing the Trustee – is an Individual or Corporate Trustee structure right for your SMSF.

An SMSF is a type of Trust similar to a Family Trust. As such the Trustee can be an Individual Trustee or a Company Trustee.

SMSF Trustee – Individual or Corporate

 

Becoming an SMSF Trustee

A Fund cannot have a sole individual as a Trustee. There must be more than one person as a Trustee if the Individual option is chosen. Therefore, you have a choice as to who becomes a Trustee of the Fund. This may include your partner, members of your family, a business partner, friends or generally anyone 18 years or over and not under a legal disability unless they are disqualified persons. The Trustees may act as Members of the Fund as well which would give them the opportunity to consolidate their super balances into the SMSF.

 

Individual TrusteesSingle Member SMSFsCompany as a Trustee
An SMSF can have up to four Individual Members, each of whom must be a Trustee of the Fund.

It is important to have a Second Trustee if it is a Single Member SMSF. You need to plan for what happens if you lose legal capacity, leave the country or die. To overcome this, you can simply appoint a Second Trustee given the following conditions:

  • Member must be one of the Trustees
  • Member is not an employee of the second trustee (unless they are related)
  • No Trustee is paid for their duties or services as a Trustee

Alternatively, you can also set up a Corporate Trustee. See Icon below.

You can also set up a Corporate Trustee for your SMSF if all of the following apply:

  • All Members must be directors of the Company
  • All Directors of the Company need to be members.
  • No Member is an employee of another member, unless they’re related
  • Corporate Trustee is not paid for its services as a Trustee
  • No Director of the Corporate Trustee is paid for their duties or services as Director in relation to the Fund

This type of Company is known as a ‘Special Purpose Company’ because its only purpose is to act as a Trustee of an SMSF.  For more information on Corporate Trustee see here.

What it means to be a Trustee

It is crucial that all Trustees have a thorough background knowledge of how an SMSF regulates and their duties. Trustees need to abide the rules and regulations when managing an SMSF. Some of these include the following:

  • Trustees need to act honestly in all matters concerning their Fund
  • Trustees need to exercise skill and diligence in managing their Fund
  • Trustees need to act in the best interest of all Members
  • Keep the money and assets of the Fund separate from other money and assets (for example, your personal assets)
  • Retain control over the Fund
  • Trustees cannot enter into contracts or behave in a way that hinders them or other Trustees from performing or exercising functions or powers
  • Keep Members informed and allow access to certain information
  • Trustees cannot access or allow others to access funds early.

 

For more guidance on the roles and responsibilities of a Member and Trustee, please our page on SMSF guidance.

 

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We are Melbourne based with clients throughout Australia. Our SMSF administration service is mostly paperless. This enable us to charge a fair fee, resulting in a good value-proposition for you.

No Advice

Superannuation Warehouse is an accounting firm and do not provide financial advice. All information provided has being prepared without taking into account of the Trustees’ objectives, financial situation or needs. Because of that, Trustees are advised to consider their own circumstances before engaging our services.

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