In SMSF, it used to have up to 4 members but now it’s gone up to 6 members in the Superfund. 

6 people’s balances are better than 1. If you have an average of 100 grand per person and you have 2 people in it, then you’ll have a 200 grand in your fund. And since you got 6, then that would be 600 grand in total. So it’s a lot more money to play with so to speak. 

You need to be careful of a few things here:

  • Death – What if someone dies and there are 5 members in the fund? How are they going to manage that dead person’s assets and estate when it comes to their superannuation?
  • Disability – Are they going to be working together constructively to manage that self-managed super?
  • Divorce – If you have two people in the fund like a husband and wife, and they get divorced, they have to act in the best interest of the fund and each other. What if you invited your son or your daughter into your fund and they got divorced but whoever they were with was also in the fund. You need to be very careful when dealing with that situation. You can have up to 6 members but there’s a reason why there’s an average of 2members per fund.

If there are more people, then it equals to more decision-makers or people with their own opinions, and that is another layer of complexity. 

You can reduce this risk by a leading member fund and we’ve seen this thing that we can set up called a ‘Leading member fund’ where there is an overall decision maker if people can’t agree. It’s kind of a cool thing to lock in if you want to take better control and you’ve got a few more members than just yourself, and your spouse. And you can convert an existing SMSF to a leading member fund as well so if you’ve already got one, we can change that and set that up to a leading member.

 

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