If you’re setting up a self-managed super fund (SMSF), or already have one, one of the most important decisions you’ll make is who acts as trustee. The fund can either have individual trustees (the members themselves) or a corporate trustee (a company, with the members as its directors). Many

SMSFs now use a corporate trustee and there are good reasons why.

Greater flexibility with members

An SMSF can have up to six members, and every member must be a trustee. But most state and territory trust laws only allow up to four individual trustees. So if you want a fund with five or six members, a corporate trustee may be the only practical option.

At the other end of the scale, a corporate trustee also lets you run a one-person SMSF as the sole member and sole director. With individual trustees, a single-member fund still requires two trustees, which means roping in a friend or family member.

Continuity when life changes

A company keeps existing even when the people behind it change. That makes a corporate trustee far more resilient when something happens to

a member. With individual trustees, the death, incapacity, divorce, or bankruptcy of a member usually means the fund’s trustee structure has to change. A replacement trustee must be appointed and the legal ownership of every fund asset, including property titles, share registries, and

bank accounts, must be updated to reflect the new trustees. That is extra cost and paperwork at an

already difficult time. With a corporate trustee, the company itself remains the legal owner of the fund’s assets. If a director dies, loses capacity, separates, or goes bankrupt, the company simply updates its directors. The fund’s assets do not need to be retitled, and the disruption is far smaller.

Easier administration

The same advantage applies whenever members come and go for more routine reasons, such as adding an adult child to the fund or removing a member who has rolled their balance out. With individual trustees, every change means updating bank accounts, share registries, and other asset records to reflect the new line-up. With a corporate trustee, the company stays the same regardless of who comes and goes as a director, so day-to-day administration is simpler and the fund avoids ongoing retitling costs over its lifetime.

Cleaner separation of money

Super law requires SMSF assets to be kept entirely separate from members’ personal assets. A company as legal owner makes that line very clear, which helps when the fund is audited and protects you if a member later faces divorce or bankruptcy.

Lower penalties and easier borrowing

If the fund breaches super rules, administrative penalties apply once to a corporate trustee but separately to each individual trustee. This means two individual trustees effectively pay double.

Lenders also strongly prefer corporate trustees when an SMSF wants to borrow to buy property, and individual trustees often struggle to find finance at all.

What about the cost?

Setting up a company does involve higher upfront costs and a small annual ASIC fee, and each director will need a free, one-off Director ID. For most funds, the long-term savings in administration and the protections gained more than outweigh those costs.

It’s not a once-only decision

If you already have an individual trustee structure, you’re not stuck with it. The trustee structure can be changed later, and many funds make the switch when a member dies, joins, leaves, or after a relationship change. Speak with your adviser about whether moving to a corporate trustee makes sense for your situation.