A key sector stakeholder has cautioned against the belief that including multiple generations of families as members of an SMSF will provide a solution to current issues a fund might be facing with regard to assets such as business real property.
“I’m yet to find a client scenario where [involving] intergenerational [members in an SMSF] was going to solve [a particular business real property] problem,” Strategy Hub co-founder Tracey Besters told delegates at the SMSF Association Technical Summit 2025 held in Sydney today.
With regard to including subsequent generations in an SMSF, Besters pointed out the original trustees needed to first understand why they are looking to take that course of action.
“I think that there are two parts to the intergenerational SMSF discussion. The first is [to know] are we passing the baton on completely so we’re bringing the next generation member in and we’re leaving it completely?” she said.
“Or are we actually putting an all-for-one and one-for-all strategy in place so we want to have parents and children and grandchildren all in the same fund? I’m sure we’ve all [executed] a withdrawal and recontribution strategy that [has involved the] next generation, so actually starting that passing on the baton [process], but what [would be] the purpose when it comes to business real property?”
According to Besters, including the next generation in an SMSF will not address a situation where the holding of a business real property asset brings into question sole purpose issues.
Such a scenario could involve a real estate asset purchased due to its proximity to where the original SMSF trustees reside. It could also involve a situation whereby finding a new tenant for the property is right for the super fund, but not so opportune for the SMSF members themselves if they are the current occupants of the premises.
Besters pointed out in these circumstances including a younger generation in the SMSF would realistically only be delaying having to find a solution for the problem rather than addressing the matter immediately.
