When it comes to set up an SMSF, the first thing you need to determine is that who will be a trustee of your fund. You should have a sound idea about the associated rules in detail.
For a trustee of your Self Managed Super Fund, you need to have a close look at all the linked aspects. Going through them will enable you to comprehend why you should have a corporate trustee. Here are four reasons:
1. Asset Protection
Think about commercial property. Suppose that someone gets trapped or injured themselves in the stairwell. At that time, they can take legal action against the building owner. Have you an insurance cover to manage this? As per the insolvency laws, your entire property asset, including your personal one will be wiped out the concerned authority.
For the protection of your personal asset, you need to have a corporate trustee, which has the advantages of limited liability, and the liability is limited to the firm. Your personal assets are not exposed, and you have to lose only your company asset in case of an injury or trauma.
2. Maintenance costs and record-keeping
By selecting a corporate trustee for your Self Managed Super Fund, paying the company maintenance costs gets more comfortable for you. Besides, you or your company members feel at ease in keeping the record of all the associated business operational works.
Is there a possibility that your fund would participate in LRBA (Limited Recourse Borrowing Arrangements) accessible to Self Managed Super Funds.
On the fund’s potential transaction, using a corporate trustee will be beneficial, as several financers can participate in these arrangements with SMSFs. You have to repay the amount from your personal assets if you spend money in the name of your business without a reasonable cause. In simple words, borrowings become comfortable for you if you have a corporate trustee for your Self Managed Super Funds.
4. Estate planning
Consider what would be to decision making if a member loses capacity or dies.
With a corporate trustee, your SMSF account will have a successor who will step in if any bad things happen to a member. He/she will make the decision on estate planning, and the interests of that member can be completely in the hands of present members of a fund. In the case of individual trustees, you will have to go through expensive paperwork to change the individual trustee upon the loss of his/her capacity or his/her death.
The aspects/reasons mentioned are enough to understand the importance of a corporate trustee. You can get in touch with SMSF accountants Sydney if you have confusion in managing your Self Managed Super Funds or you find it hard to choose a trustee for the same. The expert will guide you after explaining every associated aspect to your Self Managed fund.