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:
- 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.
- 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.
- 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.
- Obtaining finance – as a result of the above factors, banks are more inclined to loan funds to an SMSF with a corporate trustee.
Are you wanting more information on a SMSF Trustee?
If you require further information on the above, do not hesitate to contact me.
The information provided in this article is for general information and educative purposes in summary form on legal topics which is current at the time it is published. The content does not constitute legal advice or recommendations and should not be relied upon as such. Whilst every care has been taken in the preparation of this article, FC Lawyers cannot accept responsibility for any errors, including those caused by negligence, in the material. We make no representations, statements or warranties about the accuracy or completeness of the information and you should not rely on it. You are advised to make your own independent inquiries regarding the accuracy of any information provided on this website. FC Lawyers does not guarantee, and accepts no legal responsibility whatsoever arising from or in connection to the accuracy, reliability, currency, correctness or completeness of any material contained in this article. Links to third party websites or articles does not constitute any endorsement or approval of those sites or the owners of those sites. Nothing in this article should be construed as granting any licence or right for you to use that content. You should consult the third party’s terms and conditions of use in relation to any third-party content. FC Lawyers disclaims all responsibility and all liability (including liability for negligence) for all expenses, losses, damages and costs you might incur as a result of the information being inaccurate or incomplete in any way. Appropriate legal advice should always be obtained in actual situations.
Prefer to get in touch?
With offices in Brisbane, Sunshine Coast and Sydney, our team is well equipped to provide both advice and support across a broad range of legal areas.