SMSF Trustees

What is an SMSF trustee?

A self-managed super fund is a type of corporate entity known as a trust, and therefore it has trustees and beneficiaries (members). The trustees manage the strategy and operation of the self-managed super fund on behalf of the member beneficiaries. A trustee of an SMSF can be an individual or a separate trustee company. 

The SMSF trust deed – the legal document that establishes the trust and contains its rules– will usually set out the rules for choosing trustees. The ATO also has rules on who can be trustees, how they’re appointed, and how many are required.

Trustee structure – Individual or Corporate?

When setting up an SMSF, one of the first things to consider is the type of trustee structure.

• Individual trustees: up to four individuals depending on the type of SMSF
• Corporate trustee: a company that acts as trustee through the decisions of its directors

The structures differ in relation to their set-up costs, trustee numbers, registered ownership of assets, liability protection, penalties, and succession planning.

Note that under the corporate trustee structure, the trustee is a company, which is in turn managed by directors.

Can an SMSF have one member and one trustee?

A single-member SMSF can have one member but must have either:

• Two individual trustees (one of whom is also a member) or

• A corporate trustee.

However, the corporate trustee can have just one director, as long as they are also the sole member of the SMSF.

Can an SMSF trustee be paid?

No. Despite the time, expertise, and responsibility involved in being an SMSF trustee (or director) they cannot be paid. All returns must go back to the members of the fund.

What is an SMSF trust deed?

The trust deed is the legal document that establishes the SMSF as a trust. It sets out the trustees and beneficiaries (members) as well as any rules of the SMSF such as payment of benefits, how trustees are appointed or removed, who can be members, and what to do if the SMSF is wound up.

Trustees must act in the best interests of the members

The most important rule for any trustee is that they consistently make decisions in the best interests of the members. And since the fund is set up to provide a healthy income in retirement, this includes doing its best to maximise the returns on the fund’s investments.

References
SMSF regulation - ATO
Individual or corporate trustee - ATO