Setting up your own SMSF feels empowering. You’re in control, you make the calls, and your future feels like it’s finally in your hands. But buried in that setup process is one small decision that can make or break how smoothly things run; choosing your trustee structure.
Corporate Trustee or Individual Trustee: Which is better for your SMSF setup? Most people don’t think twice about it, until they hit a problem that could’ve been avoided.
So how do you know which trustee setup will actually work best for you? Here’s a clear breakdown..
Why this decision matters
Setting up an SMSF gives you control over your retirement savings, but it also puts the responsibility squarely on your shoulders. The trustee structure decides how the fund is managed, how assets are held, and what happens if things go wrong. Get it wrong at the start and you could end up with extra costs, legal issues, and unnecessary stress down the track.
You have two choices:
- Individual trustees: Each member acts as a trustee.
- Corporate trustee: A company is appointed as trustee, and each member is a director.
On the surface, individual trustees look cheaper and easier. But sometimes what looks simple upfront ends up costing more later.
Individual trustees: the upfront saver
Most people are drawn to individual trustees because there’s no need to set up a company. That means lower costs at the start. Each member just becomes a trustee, and the fund can get going.
But this approach can quickly become complex. Every time the membership changes, you have to update asset ownership records. That includes bank accounts, land titles, and investment accounts.
For instance, you have to change property documents or bank accounts every time someone joins or leaves the fund. It’s time-consuming, often expensive, and sometimes overlooked, which can cause compliance issues.
On top of that, penalties from the ATO are issued to each individual trustee. If the fund slips up, every trustee gets fined separately. With multiple trustees, the pain is shared, and not in a good way.
Corporate trustee: the long-term stabiliser
A corporate trustee costs more to set up because you need to register a company with ASIC and pay annual fees. For many people, that extra cost feels unnecessary until they see the long-term benefits.
Unlike individual trustees, the assets stay under the company’s name, no matter who comes and goes from the fund. That means you don’t have to re-register assets each time membership changes. It saves you a mountain of admin work and legal costs in the future.
There’s also better protection.
Fines from the ATO are issued to the company, not to each director. This often results in a lower overall penalty compared to having several individual trustees. For single-member funds, a corporate trustee also makes life easier because you can run the fund with just one person as both shareholder and director.
Perhaps the biggest advantage is succession planning. When a member passes away, the company continues as trustee. That makes the process far smoother for the surviving members or beneficiaries. With individual trustees, you’re forced into complicated legal changes at an already stressful time.
Which option suits you best?
If you’re starting out and want to save on costs, individual trustees might feel like the right move. But stop and ask yourself: are you thinking short-term or long-term?
Consider this scenario: You set up your SMSF with individual trustees because it’s cost-effective. Ten years later, a member leaves, another passes away, and suddenly you’re dealing with multiple title changes, solicitor fees, and extra paperwork. What once seemed straightforward has become complicated and costly.
Let’s look at the other side. You spend a bit more upfront on a corporate trustee. Membership changes? No need to alter asset ownership. Penalties? Less exposure. Long-term planning? Much smoother. Yes, there’s an ASIC fee each year, but compare that to the ongoing hassle and costs with individual trustees.
It is often the more strategic investment.
The bottom line
The choice between individual and corporate trustees isn’t just about today’s costs. It’s about how much time, money, and stress you want to save in the future. Individual trustees may suit some smaller, stable funds where members are unlikely to change.
But if you want long-term stability, smoother succession planning, and simpler asset management, a corporate trustee usually wins.
So, ask yourself: are you prepared to deal with the ongoing admin and risks of individual trustees, or would you rather pay a little more now to make life easier later?
Sometimes the cheaper option ends up being the most expensive.
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