When it comes to managing a self-managed superannuation fund (SMSF), one of the most critical decisions you’ll make is choosing the right type of trustee. A trustee's role isn’t just a formality; it significantly impacts how your SMSF operates, grows, and safeguards its assets. Whether you’re investing in property, precious metals, or cryptocurrency, Michael Jeffriess, CEO LightYear Group says opting for a Corporate Trustee over an Individual Trustee structure is by far the better option given it brings unique benefits, especially in terms of flexibility, liability, and future planning.

As SMSFs evolve to accommodate more diverse investments, a corporate trustee can offer crucial advantages to make your SMSF structure robust, agile, and prepared for growth. Let’s explore why experts say a corporate trustee is often the best fit for modern SMSFs with diverse portfolios.

1. Greater Flexibility with Fund Membership and Changes

When you select a corporate trustee structure, you’re setting up your SMSF with flexibility in mind. With a corporate trustee, your fund can hold up to six members. More importantly, making changes to fund membership becomes easier and less administratively taxing.

For example, if you’re bringing in family members to contribute to or manage a property investment or even if you’re adding new family members as beneficiaries, a corporate trustee simplifies this process. Instead of updating property titles or ownership details for individual trustees each time, the corporate entity remains the registered owner, minimising paperwork and potential legal complications.

As an Administrator - we can attest to the ease of this with a corporate structure. Keep in mind - many members leave an SMSF due to death or divorce. If you hold an asset in Individual names, and the only way to change the Trustee name may be to sell the asset (for example, Bitcoin), then you could be liable for significant capital gains tax to satisfy the compliance requirements.

However, with a corporate trustee, you don't need to do this, thus avoiding capital gains tax in these circumstances.

2. Limited Liability and Asset Protection

Investing in assets like property, precious metals, or cryptocurrency can carry risks, especially since market values can fluctuate significantly. In an SMSF with a corporate trustee, the corporate entity assumes limited liability, offering an extra layer of protection for your personal assets. In the case of legal action against your SMSF, the corporate trustee limits liability to the corporate entity rather than each individual member’s personal assets. This is especially beneficial if your SMSF holds assets that are prone to market volatility, like cryptocurrency, or assets where liability is a concern, such as rental properties.

3. Streamlined Succession Planning and Continuity

The reality of SMSFs is that they’re designed to last for decades, ideally providing benefits through retirement and beyond. A corporate trustee helps ensure continuity over time, particularly with complex assets like property or long-term holdings in precious metals.

In the event of a member’s death or exit from the SMSF, a corporate trustee structure allows the fund to continue operating smoothly without changing the trustee arrangement. In contrast, an SMSF with individual trustees must restructure and retitle assets if a trustee departs. For property holdings, this can be time-consuming and expensive, with added paperwork and possible stamp duties.

If you’re looking at long-term investments in property, precious metals, or cryptocurrency that you want to pass on, a corporate trustee’s continuity makes it much easier to manage these assets without disruption to the fund’s operations.

4. Lower Administrative Burden and Costs in the Long Run

While setting up a corporate trustee does come with initial costs, these are often offset over time by reduced administrative expenses. With a corporate trustee, you avoid repetitive administrative tasks, such as updating asset ownership details with each change of membership.

For SMSFs with individual trustees, each change to the SMSF membership – like a new family member joining the fund or a change due to divorce or inheritance – means updates to the titles of assets like property. Each of these changes requires time, paperwork, and often incurs fees. With a corporate trustee, the entity itself remains constant, minimising the administrative load and associated costs when membership changes.

5. Enhanced Asset Control and Risk Management for High-Value Investments

Assets like property, precious metals, and cryptocurrency demand close control and robust governance, particularly due to the value they can add to your SMSF’s portfolio. A corporate trustee allows your SMSF to be governed under the oversight of a single corporate entity, enhancing control over high-value or volatile investments. This is crucial for funds invested in high-risk or high-reward assets, such as cryptocurrency, where rapid market movements demand a consistent, accountable structure.

Additionally, corporate trustees are regulated entities and often subject to stringent compliance and reporting requirements. This oversight and higher level of governance help protect your fund’s assets, a benefit that particularly applies to high-value investments.

In Summary: Making the Corporate Choice

Investing in property, precious metals, and cryptocurrency can be highly rewarding for SMSFs, provided the structure is equipped to manage these assets effectively. A Corporate Trustee offers vital advantages for SMSFs, from continuity and flexibility to liability protection and administrative ease.

Please note: This is factual information only and not intended as personal advice. For personal advice please speak to an Authorised Financial Adviser.