Setting up a self-managed super fund (SMSF) is an exciting step towards taking control of your retirement savings, but one of the most important decisions you’ll make is choosing your trustee structure. This choice will affect how your fund operates and your ongoing compliance obligations.

You have two main trustee structure options for your SMSF:

• individual trustees – where each member of the fund acts as a trustee; or
• corporate trustee – where a company acts as the trustee of the fund.

With individual trustees, each member of your SMSF must be a trustee. This means if you have a two-member fund, both members must be trustees.

The main advantages of individual trustees include:

• lower setup costs as you don’t need to establish a company;
• simpler initial structure; and
• no annual fees to pay to the Australian Securities and Investments Commission (ASIC) for maintaining a company.

However, there are some drawbacks:

• all trustees must sign fund documents, which can be cumbersome;
• any penalties for legal or regulatory breaches are imposed on each individual trustee (costing more in fines);
• if a trustee dies, assets may need to be transferred; and
• changes to membership require updating legal documents.

A corporate trustee structure uses a company as the trustee of your SMSF. The members of the fund become directors of the company, giving them control over fund decisions.

The benefits of a corporate trustee include:

• continuity – the company continues even if directors change;
• easier administration when members join or leave;
• assets are held in the company name, reducing paperwork when membership changes;
• any penalties for legal or regulatory breaches constitute a single fine (where directors share the cost); and
• only one signature may be required for fund documents (depending on the company’s constitution).

The main disadvantages are:

• higher setup costs to establish the company;
• annual ASIC fees; and
• additional compliance obligations for the company.

The right choice depends on your circumstances. Consider factors such as:

• the number of members in your fund;
• whether you expect membership to change over time;
• your tolerance for ongoing costs versus convenience;
• the value of assets you plan to hold in the SMSF; and
• your long-term plans for the fund.

For funds with multiple members or those planning to hold significant property investments, a corporate trustee often provides greater flexibility and easier administration over time. Single-member funds may find individual trustees simpler initially, though the benefits of corporate trustees often outweigh the costs as the fund grows.

Remember that changing trustee structures later can be complex and costly. You may need to transfer assets and update legal documents. Choosing your SMSF trustee structure is a crucial decision that will impact your fund’s operation for years to come. The choice between individual and corporate trustees involves weighing up costs, convenience and your long-term plans.