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SMSFs: Our 'hardest' jobs
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ASIC issues alert over big gaps in SMSF trustee knowledge
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Your Budget
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Article archive
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Quarter 2 April - June 2018
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Quarter 1 January - March 2018
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Quarter 4 October - December 2017
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Quarter 3 July - September 2017
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Quarter 2 April - June 2017
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Quarter 1 January - March 2017
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Quarter 4 October - December 2016
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Quarter 3 July - September 2016
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Quarter 2 April - June 2016
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Quarter 1 January - March 2016
Quarter 2 of, 2016 archive
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Making investing a family affair
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Super and divorce: a personal finance issue
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Market Update - May 2016
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ASIC flags SMSF investors in scam risk
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Older, greyer and still working
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Working and contributing to super past 65
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The pitfalls of part-year pensions
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Replenishing SMSF memberships
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Budget will hit 15% of SMSFs
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The insidious side of low interest rates
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Market Update - April 2016
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Budget 2016-17
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Do investment principles stand test of time?
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Estate Planning - early inheritance
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US economy will bend, not break
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A detailed look at the ATO’s new LRBA guidance
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Defying life's blueprint
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ATO continuing lodgement crackdown
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Another twist on the gender savings gap
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Market Update – March 2016
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Going solo
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Age Pension means-test prevents rational decision-making
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Changing times for super collectables
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Preservation Age Rule
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Why investing for retirement isn't just about super
Going solo

 

It is well-known that self-managed super is most popular among couples, but 23% are single-member funds.  Speak to your planner today about your SMSF options.

In fact, 70 per cent of SMSFs as at June 2014 had two members - with the vast majority being in a marital relationship.

           

It is not as widely recognised that almost a quarter of SMSFs are single-member funds - 23 per cent to be exact, according to the tax office's statistical report for 2013-14.

Although the SMSFs are permitted to have up to four members - providing an opportunity for, say, adult children to join their ageing parents' SMSF - a relatively small percentage of funds take this course.

ATO statistics show that three and four-member SMSFs each make up four per cent of self-managed funds.

Of course, many investors intentionally setup a single-member SMSF. And many two-member SMSFs may become single-member funds following the death of a member or perhaps with the splitting of super savings following a marital breakdown.

Particularly given that more than 130,000 individuals are the sole members of their SMSFs, it is worth looking at how superannuation law applies to single-member funds.

Under the Superannuation Industry (Supervision) Act, a single-member SMSF must have a corporate trustee (with up to two directors) or two individual trustees. And the sole member must be either a director of the corporate trustee or one of the two individual trustees. 

No doubt as part of their estate planning, numerous members of two-person SMSFs are considering what to do with their super funds should one member predecease the other. Should the fund continue as a single-member SMSF? Much will obviously depend on personal circumstances including perhaps any relevant professional advice received and the level of interest that the surviving member has in self-managed super.

As editor Stuart Jones writes in the Thomson Reuters Australian Superannuation Handbook 2015-16, a former two-person SMSF does not immediately become a single-member SMSF upon the death of a member. Such a fund is given six months to meet the requirements for being an SMSF by appointing a corporate trustee or appointing a second individual trustee.

Discussions about single-member trustees and their trustee requirements may encourage you to think further about what is the most-appropriate trustee arrangement for your SMSF - individual trustees or a corporate trustee. See An SMSF trustee decision for the long, long haul, Smart Investing, September 3, 2015.

By Robin Bowerman
Smart Investing 
Principal & Head of Retail, Vanguard Investments Australia
​20 March 2016