|Here is a useful flowchart (pdf file 178K) which may help you to decide whether to use human trustees or a corporate trustee.|
|And here is a useful interactive wizard to help you to decide whether to use human trustees or a corporate trustee. Just answer the questions and it will give you the answer.|
The following table compares the features and consequences of using individual trustees for your SMSF against using a corporate trustee.
|Human trustees||Corporate trustee|
|Maximum number of members of the fund||Six*||Six*|
|Minimum number of members of the fund||One, but there must be at least two trustees.||One|
|Rule for trustees||Each member of full legal capacity must be a trustee.||Each member of full legal capacity must be a director of the corporate trustee.|
|So, can one person run the fund?||No||Yes|
|Suitable for a child member of the fund under the age of 18?||Yes (parent or guardian is trustee for the child)||Yes (parent or guardian is director in place of the child)|
|Can new members of the fund be added?||Yes||Yes|
|Can it invest in property?||Yes but a bank lender may require a corporate trustee.||Yes|
|On change of members how are assets dealt with?||All assets have to be transferred to the new trustees which could incur fees||No action required|
|On change of members how is bank account dealt with?||Names on account must be changed||No action required|
|What happens on legal incapacity of member?||The member's representative becomes trustee, which involves transfer of assets and change to bank account.||The member's representative becomes director, which is a matter of form filling.|
|What happens on death of member?||The member's executor becomes trustee, which involves transfer of assets and change to bank account.||The member's executor becomes director, which is a matter of form filling.|
|If permitted by law can the fund pay lump sums?||Yes||Yes|
|Establishment difficulty||With the step-by-step guide, difficult to go wrong||Some more form-filling is required as described in the step-by-step guide|
|Establishment costs||Cost of trust deed and set up pack||Cost of trust deed, company constitution and set up pack. Additional fee to incorporate the company, currently $457.|
|Annual costs||Optional financial advisor's and accountant's fees.
Obligatory auditor's fee. ATO supervisory levy.
|Same or possibly more in fees than for individual trustees, and add ASIC annual review fee (currently $45).|
* Increased from four to six as from 1 July 2021.
19 June 2021
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