How should I structure my SMSF?

There are two ways you can set-up the structure of your self managed superannuation fund (SMSF). You can elect an individual trustee or a corporate trustee structure.

Deciding on the type of trustee structure for your fund is an important decision and one of the first questions you’ll need to consider when setting up an SMSF. Your fund’s trustee structure will affect the way the fund is managed and its costs.

Will an individual trustee structure suit me?

An individual trustee structure is generally the cheaper and simpler option—at least initially.
You don’t need to establish a company with an individual trustee structure so members are not required to understand and adhere to corporation law.

It’s usually cheaper to establish an SMSF with an individual trustee. But if your fund’s members change over time, the fees and paperwork associated with adding or removing a member and changing the registration of your fund’s assets may outweigh the upfront cost savings.

Will I be better off with a corporate trustee?

When it comes to investing and running your SMSF, a corporate trustee structure will generally give you more flexibility, choice and potential protection from liability claims.

It is easier and cheaper to add a member—for example a spouse or child—and remove a member if the member dies or can no longer act as a trustee.

Single-member funds are allowed and a corporate trustee structure can have a single member or director. That means if one member of a two-member fund leaves—for example, if a husband or wife member passes away—the fund can continue to operate without having to add members.

If you’re aiming to borrow money to buy property in your SMSF, you may want to consider a corporate trustee structure. Most banks require a corporate trustee structure to be in place when lending money to an SMSF.

With a corporate trustee structure comes some liability protection. If the trustee of the fund is subject to litigation the corporate trustee provides protection to members by limiting liability to the assets of the company. That means, if a personal liability claim is made in relation to a property held by the fund individual members would not be held liable.

Who can help me decide on an SMSF structure?

If you need help deciding on the trustee structure for your SMSF speak with your financial adviser or call us on 131 267 Monday to Friday from 8am to 8pm and Saturday and Sunday between 9am and 5pm AEST.

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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.