27/11/2015

We all know the benefits of having a corporate trustee, however here at Townsends we still see a number of funds being established with individual trustees.

While a company has an initial set-up fee, if the company acts solely as an SMSF Trustee it qualifies for the reduced annual ASIC fee of only $46 a year. This is a small price to pay when you consider how much of an administrative nightmare it will save you in the long run.

Consider this example…

Bob and Janine are the members and individual trustees of their self managed superannuation fund and all is going well until one day Janine decides she has had enough and is divorcing Bob and moving to the Bahamas. Janine packs up her things, rolls out her super balance and jets off to begin her life in the sun.

Bob is grief stricken and the last thing on his mind is updating the trustee structure of his SMSF, let alone updating the title records of the Fund’s NSW property with the Titles Office.

After six months, Bob's Fund is audited and he is informed that as the Fund has a sole individual trustee, the Fund is non-compliant. In order to rectify the situation, Bob decides to simply appoint his brother as a trustee of the Fund.

Bob goes to see his accountant and sets up all the documents for Bob and his brother to sign so that his brother is validly appointed. This requires him to:
1.    Review the Fund’s trust deed to see who has power to effect the change of trustee;
2.    Ensure Janine has resigned as trustee of the Fund in accordance with the Deed;
3.    Prepare documents to appoint Bob as a trustee in accordance with the Deed;
4.    Lodge a change of details form with the ATO to inform them of the change of trustee of the Fund
5.    Prepare transfer documents to lodge with the Duties Office to reflect the transfer from Janine and Bob to Bob and his brother as trustees;
6.    Pay the relevant stamp duty on the Transfer;
7.    Prepare documents to then lodge the documents with the Titles office to update the registered title of the property; and
8.    Pay the relevant registration fee for the title registration.

What a hassle!

If the SMSF had been set up with a company from the get go, all that needs to be done is:
1.    Prepare minutes whereby Janine resigns as a director of the corporate trustee and Bob’s brother is appointed; and
2.    Lodge a change of details form with ASIC and the ATO to inform them of the change in directors.

And that’s it! Bob does not need to change the trustee of the Fund, or update the title records of the company because the property is already registered in the company’s name.

These examples show that the earlier you have a corporate trustee the better. Where an SMSF has individual trustees, a member passing away or leaving or joining the Fund, can lead to a nightmare of compliance and administrative fees and paperwork.

If you would like to start enjoying the benefits of a corporate trustee now, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222 for all your company establishment and change of trustee documents. You can even use our change of trustee implementation service and let us deal with the duties and titles office for you!