Benefits of Using a Corporate Trustee in SMSFs and Family Trusts

By Jaye Mankelow

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When managing Self-Managed Superannuation Funds (SMSFs) or family trusts, selecting the right trustee structure is crucial. While individual trustees may seem simpler, Aspira always recommends a corporate trustee, as it provides significant advantages in terms of compliance, continuity, and asset protection.

For families with complex estates or those planning for long-term management, a corporate trustee offers enhanced legal protection, operational efficiency, and simplified succession planning.

Succession Planning and Continuity

One of the primary advantages of a corporate trustee is continuity, especially beneficial in family trusts or SMSFs intended for multi-generational management.

• Reduced Administrative Burden on Changes: When an individual trustee resigns or passes away, the trust deed and asset titles often need amendments. With a corporate trustee, directors can be added or removed without changing the trust’s legal structure, avoiding costly administrative changes.
• Continuity Across Generations: A corporate trustee structure provides stability, ensuring the seamless operation of trusts and SMSFs across generations without interruption.

Example: With a corporate trustee for an SMSF, adding new family members as directors is straightforward, as the legal entity of the trust remains unchanged, making transitions smoother and more cost-effective.

Enhanced Legal Protection and Asset Separation

Corporate trustees help separate trust assets from personal ownership, reducing personal liability and providing a strong layer of protection for the trust’s assets.

• Limited Liability for Directors: Directors of a corporate trustee are generally not personally liable for the trust’s obligations, unlike individual trustees who may face personal liability.
• Clear Separation of Assets: Corporate trustees ensure that trust assets remain distinct from personal assets, offering enhanced protection and reducing risks associated with asset mingling.

Example: For family trusts, a corporate trustee protects personal assets by legally separating them from the trust’s assets, offering the family enhanced legal protection and peace of mind.

Operational Efficiency

Corporate trustees simplify the management of SMSFs and family trusts, particularly for trusts with multiple beneficiaries or complex assets.

• Streamlined Decision-Making: Corporate structures enable efficient decision-making, allowing directors to act in the trust’s best interest with fewer administrative hurdles.
• Consistent Management: A corporate trustee structure centralises decision-making, allowing for uniform policies and a smooth management process, especially valuable in multi-generational trusts.

Example: An SMSF with real estate and investment portfolios benefits from a corporate trustee, as decisions can be managed efficiently by directors who are aligned with the fund’s long-term goals.

Regulatory Compliance

A corporate trustee structure simplifies compliance for SMSFs and family trusts, especially with the ongoing regulatory requirements they face.

• Consistent Compliance Management: Corporate trustees are well-equipped to maintain robust record-keeping and reporting practices, keeping SMSFs and family trusts aligned with regulatory obligations.
• Reduced Risk of Non-Compliance: With structured responsibilities and processes, corporate trustees ensure compliance, reducing risks associated with missed requirements, which can be common with individual trustees in complex estates.

Tip: Corporate trustees help ensure that regular compliance tasks, such as financial reporting and accurate record-keeping, are efficiently managed, which is essential for large estates or trusts with multiple assets.

A corporate trustee brings essential benefits to SMSFs and family trusts by enhancing continuity, legal protection, and compliance. For families managing significant or complex estates, a corporate trustee provides stability and a professional approach to asset management.

Aspira always recommends a corporate trustee for SMSFs and family trusts, as it offers the most robust structure for long-term asset protection and efficient administration. Reach out to our advisors to learn more about the advantages of a corporate trustee and to determine if it’s right for your family trust or SMSF.

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