Heffron SMSF Solutions head of customer Meg Heffron said that, with the government’s proposal to extend the total number of SMSF members to six mainly targeted at families, she expects the measure won’t attract a significant amount of interest.
“I can’t imagine that it’s going to result in a boom of business partners setting up a fund together, so it [seems] to be mostly targeting families. The measure appears to be responding to the desire for SMSF trustees to have all their kids in their fund,” Ms Heffron said.
“Most families have either four or fewer kids, so six members probably covers everything, but I wonder if people actually will take it up? I wonder if this is actually a solution looking for a problem. I don’t know an awful lot of people who are desperate to have their children in their fund.”
If Labor’s proposed policy around franking credits is implemented, however, then this could drive trustees to add more accumulation members, she said.
“Then maybe people will do it. They may add their two children plus their children’s spouses and then I expect the future of litigation is going to be a falling out between different members of an SMSF,” she warned.
“It’s something to be so careful of, even just adding your kids but certainly when you’ve also added their spouses to your SMSF.”
While Ms Heffron said that this may provide a tax benefit if the franking credit proposal does go ahead, which for some SMSF trustees could be substantial, it’s a risky move to dive straight into having multiple generations in an SMSF.
“If anything is going to change interest in this, it will be the franking credits. I don’t think the measure in itself will be of much interest,” she said.
I have managed three Family SMSFs for over 20 years and each has four members. Children in the fund were minors when the funds were established and now these children and working and contributing to the fund, We will welcome the six member funds.
With respect, I completely disagree. 6 members can be a real benefit.