Can you have a Single Member SMSF?

Can you have a single member SMSF?  Yes you can. There are two options in creating a single member SMSF.

Corporate trustee – A corporate trustee is established to act as the trustee of the fund in which the single member is the sole director.

Individual trustee – For individual trustees, you are required to appoint two trustees. The single member will be a trustee and another trustee who is not a member is appointed. This non member trustee must be either related to the single member or anyone who is not an employer of the single member.

So which structure should you choose to establish your single member smsf? Each structure has its pros and cons. Establishing a SMSF with individual trustees is a simple process with no additional establishment costs and less ongoing fees such as ASIC fees for a company. Meanwhile, in order to establish a company to act as a trustee for an SMSF, the cost may vary from $800 upwards.  However, aside from cost, the corporate trustee structure has the ability to add/remove members to the fund without having to change the names in which SMSF assets are held. This is a big plus, as changing asset titles everytime a new trustee is appointed is a costly and inconvenient process.

Please note that each person’s situation is different, so doing further research or speaking to a financial advisor is recommended to ensure you choose the right structure for you to set up your single member SMSF.

What happens if the single member in the single member SMSF loses the capability to keep the fund running? This is an essential question that needs to be addressed. If the single member loses their legal capacity and he/she was a sole director of the corporate trustee, then the appointed legal personal representative may step in to administer the affairs. Therefore, it is essential that a valid legal personal representative be put in place otherwise, in a circumstance where the single member suddenly loses mental capacity or passes away, the fund’s assets may be paid out which may not be in line with the single member’s wishes.

In the case of a individual trustee structure, the other trustee has the ability to administer the fund. Therefore it is essential that the remaining individual trustee is someone you can trust who would exercise any discretion available to them in accordance with your wishes.

Disclaimer: This information should not be considered personal financial advice as it is intended to provide general advice only. This factsheet has been prepared by Superhelp Australia Pty Ltd without taking into account your personal objectives, financial situations or needs.

The information contained in the factsheet may not be appropriate to your individual needs therefore you should seek personal financial advice before making any financial or investment decisions.