We often get asked if the children should be the member and trustee of the SMSF?
From our experience, we have seen lots of compliance risks by adding children to our clients to their SMSFs.
In our opinion,we do not think is a good idea to add children to your SMSF.
However, we would like list all the possible advantages and disadvantage in this article so the trustees can make their decision based on their circumstances.
- More members can reduce running costs: you can have maximum 4 members in your SMSF and the average running costs can be lowed.
- Children’s superannuation can increase your fund balance: your fund balance can be increased by more members and trustees can invest certain assets that requires minimum balance, such as properties.
- there is no immediate need to wind up the fund if parents pass away.
- children can learn how to invest from early age.
- Children can access to the cash and assets of your SMSF. If they withdraw money from your SMSF, the complying status of your fund will be at risk.
- Your SMSF may be attacked by the family court in case of your children’s divorce.
- Children can control how the death benefits will be paid from your SMSF. This may be against your will.
- If children live in other cities or countries, they may not able to fulfill their trustee responsibilities for running your SMSF and signing tax returns, minutes and other legal documents.