An individual trustee structure is typically simpler to establish as it’s not necessary to establish a trustee company and members aren’t required to understand or follow the corporate law requirements. According to the ATO as at 30 June 2020, approximately 37% of SMSFs had individual trustees rather than a corporate trustee. However, recent figures indicate that more than 81% of new SMSF’s established are set up with a corporate trustee. It is typically cheaper to establish an SMSF with an individual trustee, however these upfront savings may be outweighed if changes are required in the future. It can be costly to remove a member or change the trustee structure.
An individual trustee structure may be appropriate if you do not envisage any changes to the trustees or members of the fund. But if you breach any fund requirements, the penalties overall may be higher with individual trustees as each can be separately fined for the same breach.
There are also additional benefits to SMSFs with corporate trustees, which will be explained later.