Corporate vs Individual Trustee
Choosing the type of trustee for a self managed superannuation fund is a fundamental decision that must be made at the time a fund is established.
The choice is between a corporate trustee, where each member of the fund is a director of the trustee company, or individual trustees. Superannuation law requires that if the fund does not have a corporate trustee (i.e. the members are individual trustees), then the trust deed of the fund must provide that the sole or primary purpose of the fund is the provision of old-age pensions.
Corporate trustee
It is typically recommended that a special purpose superannuation trustee company be established when setting up a new SMSF. If you have an existing family company, that company can act as trustee, keeping in mind, however, that all members of the superannuation fund must be directors of the family company. Furthermore, where an existing family company is used it is essential that the fund assets be maintained separately from other assets that the company might have (e.g. business assets).
A corporate trustee simplifies the process in the event of death or departure of a trustee. Fund investments remain in the name of the company. Therefore, there is no need for the administrative process of changing the names of investments, bank account and other fund documents, as would be the case for individual trustees.
There are additional costs associated with a corporate trustee. In addition to the cost of setting up a company, there is also the cost and extra administration associated with lodging an annual company return. ASIC also needs to be advised when directors' details are changed.
Individual trustees
There are no costs associated with individual trustees acting as trustee of a self managed superannuation fund.
Individual trustees are not burdened with complying with the rules of ASIC.
There are however administrative obligations in relation to changing the name of the fund's investments and documents if a member of the fund leaves or dies.
If members leave the fund so that only one member remains, the trustee structure will then need changing in order to comply with the definition of a single member self managed fund. This is not so for a corporate structure, where the existing trust structure can remain intact with the sole remaining member being able to be the sole director of the trustee company.
Outlook can provide you with professional advice regarding appropriately structuring the trustees for your Self Managed Super Fund.