A family discretionary trust is a more sensible vehicle for investors to use when looking to involve family members, such as children, and would work well alongside an SMSF, rather than as a substitute, according to HLB Mann Judd.
A family trust was a better structure than an SMSF in some ways as it provided greater flexibility and had the ability to include relatives across two generations, HLB Mann Judd superannuation director Andrew Yee said.
“It’s easier to distribute the capital and income in a family, rather than [children] being locked away from the funds until retirement,” Yee told selfmanagedsuper.
“Also because it’s discretionary, it’s easier to manage and is much more flexible.
“Side by side, an SMSF and a family trust is great.”
He said the firm did not see many investors putting minors into SMSFs.
“Mega wealthy families like to do things like that, but personally I don’t think it’s a great idea,” he said.
“The best SMSFs are mum and dad, husband and wife because once you get family involved, you’re going to get increased tensions.”
At an HLB Mann Judd Building Wealth briefing in Sydney last week, he said the bulk of current inquiries were now coming from the next generation, which was strongly reflected in ATO data.
“The sons and daughters of our long-established clients are now starting to ask this question about when is the right time to start an SMSF,” he said.
“So the younger generation are getting involved in superannuation and they’re getting more involved in SMSFs, thanks to media, information getting out there and the online generation.
“Wealth builders who have paid off their mortgage are starting to have a savings plan and accumulate, and at the other end of the spectrum it’s also easier for them to set up their own fund now and it’s a lot more inexpensive.”
HLB Mann Judd personal wealth management partner Michael Hutton added greater awareness meant there was more of a market for SMSFs than ever before.
