The Pros and Cons of Sharing an SMSF with your Children
Recently we covered how to go about setting up an SMSF for your children, now we cover the Pros and Cons of sharing an SMSF with them.
As a parent, you may think that setting up an SMSF that includes your children as members is a good idea. Not to say that it isn’t, but there are some pros and cons to consider, which we have discussed below.
The Pros:
- You could have more money to invest into your SMSF
- If you start to struggle with the management of your super fund, then your children can share the responsibility and help you out
- It gives you the ability to keep an eye on your children’s superannuation money, regardless of how many times they switch jobs - you can always have your SMSF as their selected super fund
- It’s cheaper to manage all the funds within the one SMSF
- You can self-insure your children in case of an event such as temporary or permanent disability
- You may potentially have the ability to boost your children’s balances with co-contributions
- It helps teach your kids the importance of saving for their retirement, and you’re also giving them a head start
The Cons
- Your control over decision-making could be affected if all members of the fund are granted equal voting rights
- The fund could be more complicated to administer due to the differing ages of the members
- Problems could arise if your kids or their partners don’t see eye-to-eye when dealing with the estate
- If you personally do not want your children knowing how much money you have invested into your super, then including them in your SMSF would compromise that privacy
Clearly the option of including your children in your SMSF is completely your decision, we just hope the points listed above help you to make the right decision for you.
If you have any questions regarding setting up an SMSF with your children, phone us on (07) 3251 4444 or contact us through our website. What type of SMSF do you have? Share in the comments below.
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