If you want to set up an SMSF for yourself only, you will have only two options:
- SMSF with individual trustees: you need to find another trustee who is not a member of the fund. In other words, you need to have at least two individual trustees including yourself. The non-member trustee can be related to you or not related but can not be your employer.
- SMSF with a corporate trustee: you can set up the SMSF by yourself and there is no need to get anyone else involved.
If you would like to find another individual trustee, the pros and cons are as below:
- Advantages of using another individual trustee:
- no setup/establishment costs for your SMSF with our free setup services.
- no ongoing company ASIC annual review fees.
- less paperwork to sign.
- Disadvantages of using another individual trustee:
- the other trustee is also the legal owner of all your SMSF fund assets even though he/she is not a member of your SMSF and does not have any balance in your SMSF.
- you need other trustee’s signature frequently for annual tax return, financial reports, minutes, opening bank accounts or share/investment trading platforms.
- the other trustee name will appear on all you assets’ ownership certifcates, such as land title, share holding certificate, bank accounts etc.
- you need to make any major decisions in regards to the operation of your SMSF with the other trustee, such as investment decisions, starting a pension account, winding up your SMSF etc.
- if the other trustee leaves your SMSF, you have to wind up your SMSF or find another trustee or change the trustee to a corporate trustee.
- if you pass away in an unlikely event, the other trustee has the power to distribute your SMSF assets if you do not have a will or valid binding death nomination.
If you would like to set up a new corporate trustee, the pros and cons are as below:
- Advantages of using a corporate trustee:
- you have the total control of your SMSF assets.
- you make all the decisions on how you want to run your SMSF.
- you can add a member without changing the name of the SMSF assets.
- Disadvantages of using a corporate trustee:
- setup costs $880.
- ongoing costs are about $260 per year.
In conclusion, it seems that the only disadvantage of having a corporate trustee is the costs.
If you want to use individual trustee structure to save some costs, our recommendation is that you have to find someone who you can trust to be the trustee of your SMSF.