Q. I'm looking to start an SMSF, with property as an asset within it. I have $275,000 in my fund currently. What are the benefits or downfalls of doing this alone, rather than having other trustees in my fund?
A. Setting up an SMSF to buy property has many great benefits. However, setting up an SMSF with others can have risks.
In my experience, a fund with more than one member, it is usually a husband and wife. The benefits of this are that the couple is able to combine their super balances and ongoing contributions and borrow the shortfall to fund the purchase of a property. Most of the time, the family structure
is straight forward and in the event of something unforeseen happening to either member, the estate planning for those members is straight forward.
If the members are not husband and wife, things can get complicated. As an example, in the case of divorce, some of the assets of the fund could become part of a divorce se lement. If the bulk of the fund is made up with property, this could mean that even if you are not part of that divorce, the property may still be required to be sold to meet the conditions of the settlement, and therefore affect your retirement plans.
Risks like these can be mitigated with good advice and planning, but could also be easily avoided altogether by keeping the membership structure simple.
In regards to your circumstances, if you are not fully aware of what you could do with your super balance and whether or not that is enough to go it alone, it’s best you seek out professional advice from appropriately qualified advisers to get you on the right track.
Julian Fadini, director, Bellevue Capital Financial Services