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For single member SMSFs, there are special rules around who can be trustees. These funds have the choice of using individual trustees, or a corporate trustee (a company which acts as a trustee for the fund).
Due to the nature of an SMSF being a trust, all assets are legally held in the name of the trustee. For a fund with only one member, if this member was the only individual trustee of the fund, then it would be extremely difficult to determine the difference between the member’s individual assets (in their name) and their super fund assets (also in their name). Therefore if a single member fund chooses to have an individual as a trustee, they must appoint two individual trustees – themselves and either a relative of the member, or any person who does not employ the member.
In such cases, the legal title of the assets within the fund will be in the names of the two individual trustees, often stating “as trustee for the relevant SMSF name”.
The other option available for single member SMSFs is to use a corporate trustee. The company can either have a sole director – being the member, or two directors – being the member and, either, relative of the member or any other person who is not an employee of the member.
Whichever option is chosen as the trustee for a single member SMSF, the trustees or directors of the corporate trustee must not be remunerated from the fund, or from any person, for any duties or services performed in relation to the fund.
An SMSF with more than one member also has the option of using individual trustees or a corporate trustee.
If individual trustees are used, then each member must be a trustee and each trustee must be a member.
Therefore, a four member fund will have four individual trustees acting together in the capacity of trustee for the fund.
If a corporate trustee is used then each member must be a director of the company and each director must be a member of the SMSF.
In either case, no member of the fund can be an employee of another member of the fund, unless the members concerned are relatives.
Remember, that no matter which option you chose for your fund, the trustees or directors of the corporate trustee must not be remunerated from the fund, or from any person, for any duties or services performed in relation to the fund.
For further details, read “Why would you choose a Corporate Trustee?” or contact The SMSF Accountant to find out more in relation to the potential trustee(s) of your fund.