A corporate trustee requires a higher initial investment, however it can save time, money and inconvenience in the long run.
Change of Trustees
Changes typically arise when children are added to the fund or members depart due to death or divorce.
Should you wish to introduce new members (or remove members), a Self Managed Super Fund (SMSF) with a corporate trustee makes this very simple and cheap. New members are simply appointed (or removed) as directors of the corporate trustee.
Alternatively, SMSF’s with individuals as trustees must transfer all assets and bank accounts into the names of the new trustees every time there is a change of membership. This requires the drafting of a legal document appointing the new trustees. Copies of this document must then be supplied to share registries, banks etc to change asset ownership. Such changes are time-consuming, expensive and avoidable with a corporate trustee.
Additionally, in the event of a death of a member, these changes must happen at a time when surviving family members are coping with their loss.
Death of a Member
A Corporate Trustee is able to handle tax and estate matters more efficiently on the death of a member. This is because companies continue to operate even on death of a director.
Single Member Funds
Corporate trustees are ideal for SMSF’s with only one member. The sole member can administer the fund without the need for another trustee.
The alternative for Single Member Funds is for the single member to find a relative or non-employee to volunteer as an unpaid trustee.
Existing companies are often unsuitable for a role as SMSF corporate trustee.
Companies that already hold assets on their own behalf or as trustees for family trusts are not suitable as SMSF trustees. Sharing corporate trustees between SMSF’s and family trusts can lead to confusion and potential disputes about asset ownership.
Corporate Trustee ASIC Annual Fees
ASIC fees for companies acting exclusively as corporate trustees for SMSF’s are heavily discounted. This means the ongoing cost of a corporate trustee is minimal.