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Double-up makes two-SMSF strategy questionable

The necessity to replicate standard process makes the strategy of holding two SMSFs to comply with the new super reforms one that trustees must consider carefully before implementation, according to a specialist educational provider.

“It would certainly make it a lot simpler in the area of ‘these are my pension assets and these are my accumulation assets’, but then you’ve got the doubling-up of the administration,” Miller Super Solutions founder Tim Miller told selfmanagedsuper.

“So you’ve got two returns to lodge. Then you’ve got your requirement to ensure there are two lots of estate planning procedures in place, so you might have to double-up on your binding nominations or your nominations of beneficiaries and those sorts of things.”

However, Miller stressed arguably the most challenging aspect of having two SMSFs is having to manage the likelihood of trustee incapacity for both funds.

“Who potentially is going to be the legal personal representative for the funds involved? Somebody might want to be the executor of your estate and deal with the settling out of information when someone passes away, but do they want to take on the full-time, full-blown trustee responsibilities of a self-managed super fund?” he asked.

“So you’re multiplying that by two as well.”

Miller suggested small Australian Prudential Regulation Authority funds may be a solution, but warned there are currently only two trustees in the industry providing this type of service.

He reiterated the fact a two-fund strategy will undoubtedly attract what probably would be unwanted ATO attention as the regulator has already expressed its dislike of these types of strategies, but said regardless of this stance the administrative issues identified above still had to be addressed.

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