Key takeaways
- An SMSF can have individual trustees or a single corporate trustee (a company).
- A corporate trustee costs more to set up but is simpler when members change or a member dies.
- Individual trustees are cheaper upfront but require asset titles to change whenever membership changes.
- Many advisers favour a corporate trustee for the long-term flexibility it provides.
Every SMSF needs a trustee, and you choose between two structures: individual trustees, or a corporate trustee, which is a company set up to act as trustee. The choice is not just administrative. It affects cost, ongoing paperwork, and how smoothly the fund handles change.
Individual trustees
With this structure, each member is personally a trustee. A fund must have at least two individual trustees (a single-member fund needs a second individual trustee who is not an employer of the member, or a corporate trustee instead). Assets are held in the names of all trustees jointly.
The appeal is cost: there is no company to register or maintain. The drawback is that whenever a member joins or leaves, the title to every fund asset has to be updated to reflect the new trustees, which can be slow and, for property, expensive.
Corporate trustee
Here a company acts as the single trustee, and members are directors of that company. Assets are held in the company's name. Adding or removing a member usually just means changing the company's directors, while the asset titles stay in the company's name.
A corporate trustee costs more to set up and carries a small annual review fee, but it is generally simpler over the life of the fund, particularly when members change, a member dies, or the fund holds property.
How they compare
| Factor | Individual trustees | Corporate trustee |
|---|---|---|
| Setup cost | Lower | Higher (company registration) |
| Ongoing cost | Minimal | Small annual review fee |
| Single-member fund | Needs a second trustee | Works with one director |
| Member changes | Retitle every asset | Change directors only |
| Holding property | Harder to change later | Simpler |
| Penalty exposure | Per trustee | One penalty for the company |
Which should you choose?
For a single-member fund, or where you expect membership to change, a corporate trustee usually wins on flexibility. If cost is the priority and the membership is stable, individual trustees can work. Because changing structure later involves retitling assets, it is worth getting this decision right at setup. This is general information, so weigh it against your own plans with your adviser.
Frequently asked questions
- Can I change from individual trustees to a corporate trustee later?
- Yes, but it means retitling every asset of the fund into the company's name, which takes time and, for property, can incur costs. That is why the decision is best made at setup.
- Why does a single-member fund often use a corporate trustee?
- A single-member fund with individual trustees needs a second person to act as trustee. A corporate trustee lets one person run their fund as the sole director, without involving anyone else.
- Is a corporate trustee worth the extra cost?
- For many funds, yes. The flexibility when members change, the simpler handling of death benefits, and cleaner asset ownership often outweigh the modest extra cost over the life of the fund.
