Different Types of Trustees

Different types of Trustees

There are two ways you can set up your SMSF:

  • Up to four people to be the trustees
    For example: John Brown and Jane Brown as trustee for the J & J Brown Super Fund
  • A corporate trustee
    For example: John and Jane Super Pty Ltd as trustee for the J & J Super Fund.

The option you choose will impact on a number of elements:

  • Member and trustee requirements
  • Cost of running the fund
  • The name/s that appear on the title documents of the fund assets
  • Separation of assets
  • Who has to pay any penalties
  • What happens if a trustee is unable to continue as a trustee (death or incapacity)

The differences between the two types of trustees are as follows:

Individual TrusteeCorporate Trustee
Trustee requirements
  • Each member must be a trustee. Single member funds must have two individual trustees.
  • If a member leaves the fund and resigns as a trustee, leaving only one member in the fund, a second individual trustee must be appointed.
  • Each member must be a director. Single member funds can have a corporate trustee with the member as the sole director.
  • If a member leaves the fund and resigns as director, leaving only one member in the fund, they do not have to appoint a second director.
AdministrationMore administrative impact if a member / trustee leaves the fund, as all ownership documents must be amended to reflect the new trustee composition.Less administrative impact if a member / trustee leaves the fund, as ownership documents remain unchanged.
CostNo additional cost.Costs involved in establishing a company for the corporate trustee, with annual fee payable to ASIC.

Single Member SMSFs

A self-managed superannuation fund may have only one member if it satisfies certain basic conditions.

An individual cannot be both the sole trustee and sole beneficiary of a trust as the interests merge and there is no trust.

The SIS Act addresses this by allowing an SMSF to have a single member if the member is one of two individual trustees or a director of a company (corporate) trustee of the fund.

The most common arrangements are:

  • Two trustees - one is the member and the other is a relative of the member or can be another person providing they are not an employer of the member.
  • The company acting as the trustee - where the member is the sole director of the company, or the member is one of only two directors of the company, and the member and the other director are relatives or another person and that person is not an employee of the member.

Children under 18

A child under the age of 18 can be a member of an SMSF. The parent, guardian or legal personal representative, who is a trustee of the SMSF acts as their representative.

2017-12-18T22:31:41+00:00