The Law Review’s latest newsletter summarises the advantages and disadvantages of Corporate and Individual Trustee structures for a self managed super fund.
Consider these key differences:
A corporate trustee structure does not require a second director and so can operate with a sole member/director. An individual trustee structure requires a minimum of 2 trustees.
If a SMSF has 2 members in a corporate trustee structure where both members are directors, the SMSF can continue with a sole director if one member dies. This would not be possible with an individual trustee structure.
In a corporate trustee structure all the assets are in the name of the corporate trustee. Therefore any change in directors will not impact on the ownership documents.
A corporate trustee structure can page super benefits in the form of lump sum or pension, where an individual trustee structure must pay benefits in the form of a pension.
A corporate trustee structure has limited liability which may offer greater protection for the assets in your SMSF.
If borrowing money within your SMSF, most major lending institutions will require a corporate trustee structure.
If you are using a company to act as corporate trustee of SMSF and run as business as well, the SMSF funds may be at risk if the business goes into receivership.
Corporate trustee structures are usually more costly to administer than an individual trustee structure.
Image compliments of Stuart Miles and freedigitalphotos.com