Insight

Self-Managed Superannuation Funds: A cornerstone of family wealth

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Self-Managed Superannuation Funds (SMSF) have been a favoured structure for many families to come together and build wealth. With a 15 per cent tax rate and 0 per cent once in the pension phase, it is regarded as a beneficial way to diversify and build family wealth.
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Until recently, the issue – or barrier to having an SMSF – has been that only four members are allowed within the structure. While this was ideal for families with two children, it was very restrictive for families with more. Now with the announcement that SMSFs can have six members, it is a good time to come together, discuss your family’s vision, your purpose, your investment strategy and learn how you can bring this all to life.

Your responsibilities within a SMSF

In an SMSF, all members must be directors of the trustee company. This means it is important you understand your responsibilities as both a director and a trustee. As much as a SMSF allows you to bring your dreams to life, you need to ensure you work within the regulations as ultimately you are responsible for saving for your retirement. It’s a serious responsibility that needs to be understood by all.

Family governance structures – what does that mean?

Deciding to grow your wealth together as a family may sound like a great idea but it is important that family governance structures are in place.

You first need some ground rules. You won’t always see eye to eye when discussing investments. You may have different risk profiles or be in different stages of your life. This needs to be discussed and planned for. Should one generation be retiring or entering the pension phase, you need to ensure you have cash available to pay the pension. You can’t invest all the funds in a geared property. We find many families invest in their time and money in good investment advice but often overlook the family element. We ensure the family receives as much attention and focus as the investments.

Making estate planning a priority

When investing together as a family, it is important that estate planning is a priority. This means not just considering how you are going to look after your spouse and children, but how you are going to look after your family without undoing the investment strategy in place. When it comes to multiple family units, you need an aligned, long-term plan that looks after everyone’s individual families while still trying to grow wealth as a family.

The advantages of a SMSF

  • You have control over what you invest in.
  • You can implement tax-effective strategies to achieve your vision.
  • When you have six family members in one fund, the structure becomes a cost-effective option.
  • The pooled funds of six family members allow you to dream big.
  • For many families, they wish to have property or business property in their SMSF, with six family members' funds, this vision can become a reality.
  • It provides flexibility.

Working with clients

Initially, we work with you to learn about your family vision, your purpose. Then we work with you to devise a strategy on how we can make this all a reality.

Not only do we assist you in setting up the structure, we also provide education to ensure all family members understand their responsibilities as directors and trustees. In addition to working with your family, we work with your solicitors to ensure your estate plans are aligned and the vision can live on for generations.

Wrap up

The increase of members in an SMSF has really cemented its position as a cornerstone of family wealth creation.

Whether you want to diversify your wealth or invest funds outside of the family business, it is time to come together as a family and bring your vision to life so that your family can benefit for generations to come.

Learn more about how our Superannuation services can help you

Learn more about how our Superannuation services can help you

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General Advice

This information is intended to provide general advice only and does not take into account your objectives, financial situation or needs. Before acting on any of the information, you should consider its appropriateness, having regard to your own objectives, financial situation and needs. If you are considering acquiring or continuing to hold a particular financial product, you should obtain the Product Disclosure Statement (PDS) relating to the product and consider this before making any decision. The information in this document been prepared by Grant Thornton Wealth Advisory Services Pty Ltd ABN 61 007 073 305 AFSL 24500.

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