A self managed super fund is a trust that is a formal legal arrangement where the trustee holds assets for the benefit of the beneficiaries, being the members. The trustee manages the assets.
The trustee owns the assets (title is in the name of the trustee), and should be designated as held as trustee for the SMSF.
A SMSF can have either:
A SMSF may have a maximum of four members. Members must be either trustee individually, or as a director of a corporate trustee.
|Number of member||Individual trustee||Company trustee|
|1 member||The SMSF must have two trustees, one being the member of the SMSF.||The member will be the sole director of the company trustee. The company trustee may have a second director.|
|2 – 4 members||All members must be trustees of the SMSF, and all trustees must be members of the SMSF.||All members must be directors of the company trustee, and all directors of the company trustee must be members of the SMSF.|
The easiest and cost-effective way to set-up a SMSF is with individual trustees. There is no additional establishment cost.
Single member fund
A single member fund cannot have the member as the only individual trustee. If a choice is made not to use a company, the member must appoint a second trustee. It may be difficult to find a second trustee who is willing to take on this responsibility leaving a company trustee as the only option.
If a company is used as trustee, the member can be the sole director of the company. This gives the member complete control over the fund.
A corporate trustee is a company that act as trustee for the SMSF. The company is normally established with the sole purpose of acting as trustee for the SMSF.
Where a company is the trustee of a fund, a proprietary limited (Pty Ltd) company is used with the members being the directors of the company. The directors of the company effectively manages the SMSF, through the company. Most SMSF avoid using a company as a trustee because of the cost associated with this structure. The company is not required to prepare financial report or lodge tax return.
Involvement of all members
All members are either individual trustees or directors of a corporate trustee of the fund. This means all members are involved in managing the SMSF.