SMSF Trustee – company or individual?

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A common question clients ask me when setting up their Self Managed Superannuation Fund (‘SMSF’) is whether they should individually act as the trustee of their SMSF, or appoint a company as the SMSF trustee.

My advice to this question is always – appoint a company.  The advantages of having a corporate trustee of your SMSF by far outweigh acting personally as trustee.

Advantages of a Corporate Trustee

Some of the advantages of appointing a corporate trustee of your SMSF:

  1. Liability Risk – by appointing a company as the trustee of your SMSF, liability will revert to the corporate trustee and not the directors of the company personally. However, this does not mean that the directors are excused from their director’s duties. This is opposed to individual trustees, where liability will be incurred personally.  This may result in an attack on personal assets of the individual trustees.
  2. Succession – a corporate trustee allows the members of an SMSF to come and go a lot easier. For example, where a member wants to leave the fund, they must resign as a director of the corporate trustee of the SMSF. Where an SMSF has individual trustees, and an individual trustee wants to resign, a Deed of Resignation and Appointment will have to be prepared.  This is a cost that can be avoided with a corporate trustee.
  3. Administration Assets – by appointing a corporate trustee of your SMSF from the outset, the assets of your SMSF will be held on trust by the corporate trustee.  In comparison, where an SMSF has individuals as its trustees, if those individuals resign, the assets of the SMSF will have to be subsequently amended.
  4. Obtaining finance – as a result of the above factors, banks are more inclined to loan funds to an SMSF with a corporate trustee.

If you require further information on the above, do not hesitate to contact me.

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