A self managed superannuation fund (SMSF) may have individual trustees or a company trustee.

Individual trustees work well where there are between two and four fund members who are related, however a company trustee may be superior where:

• there is only one fund member
• membership of the fund may change, eg through divorce or children subsequently joining the fund, or
• it is envisioned that the fund will outlast the original members.

All trustees and directors need to consent in writing to being appointed and these records need to be retained for at least 10 years.

Things to Consider	Individuals as trustees	Company as trustee
Purpose of fund	The fund must be set up with a default option of providing pensions. The SMSF can pay lump-sum benefits if permitted under the trust deed.	The fund can be set up to provide benefits as lump sums or pensions.
Cost	No additional costs. Set up of the SMSF could cost as little as $500.	Additional costs associated with establishing a company and future annual costs of the company. Set up costs generally range from $900 to $1800.
Divorce	If the individual trustees are husband and wife then, in the event of a divorce and separation of fund assets, a replacement trustee may be required for the fund to remain valid.	In the event of a divorce and separation of fund assets, the corporate trustee can have a single director.
Change of Membership	If the fund has two members and one leaves or dies, a replacement trustee must be appointed.	If the fund has two members and one leaves or dies, the corporate trustee can have a single director.
Administration	If an individual ceases to be a trustee or additional trustees are added, then ownership of titles will need to be changed. This attracts additional costs.	Assets of the fund are owned by the company as corporate trustee. Can change directors without changing ownership titles. Need to notify ASIC within 28 days of change in director.

It is also worth noting that share registries and broker services do not cater for more than two names on the titles of assets or for account names. On events such as death or divorce, which may change the number of trustees, registries can require off market transfer forms for each asset, causing additional costs relating to time and expense.


Disclaimer: The information contained in this document is given in good faith and has been prepared from information believed to be accurate and reliable. This information is of general nature only and based on Multiport’s interpretation of the present laws but no guarantee is provided. This document is not designed to be a substitute for financial or investment advice and should not be relied upon as such. Reproduction of material in this document is only permitted with approval of the author.