If you’re setting up a Self-Managed Super Fund (SMSF), it’s important to choose the right structure for your needs. Two common types are the Standard SMSF and the Leading Member SMSF. While both are compliant with Australian superannuation laws, they serve different strategic purposes—especially when it comes to succession planning.
What is a Standard SMSF?
A Standard SMSF is a straightforward super fund where all members are equally involved in decision-making. This fund type suits most Australians who want direct control over their super investments and are not focused on passing benefits specifically to family members.
For Standard SMSFs with a corporate trustee, a special purpose SMSF company should be used. This is a simplified version of a company that doesn’t pay dividends and is created solely to act as trustee of the fund.
What is a Leading Member SMSF?
A Leading Member SMSF (sometimes called a “bloodline SMSF”) is designed with succession in mind. It gives one key individual—the Leading Member—extra control over the fund. This includes:
- Deciding who can be a member of the fund (usually limited to lineal descendants)
- Controlling the trusteeship and key decisions, even in situations like divorce, dementia or bankruptcy
- Passing on superannuation benefits directly to lineal descendants via pensions or lump sums
- Option to deem a spouse or partner as a “lineal descendant” for succession purposes
This structure is ideal for families who want to keep wealth in the bloodline across generations.
Corporate Trustee Considerations
For a Leading Member SMSF, a specific Leading Member Special Purpose Corporate Trustee must be used. This company is also a reduced version of a standard company, created solely to act as trustee and not to pay dividends. It differs from the standard SMSF corporate trustee due to its additional control features linked to the Leading Member.
Including an Enduring Power of Attorney (EPOA)
An optional but powerful addition to the Leading Member SMSF is the Enduring Power of Attorney (EPOA). This allows a nominated person to step in and act as trustee if the Leading Member becomes incapacitated—ensuring continued control and smooth fund management.
Which Should You Choose?
- Choose a Standard SMSF if you want a flexible, equal-member structure or have members outside your immediate family.
- Choose a Leading Member SMSF if you want to control succession, keep superannuation benefits within your bloodline, and plan for long-term family wealth protection.
If you’d like to find out more, email mary-jane@freedomffs.com.au