Comparing DIY, standard, family and leading member funds
Most Australians think an SMSF is a one-size-fits-all structure. It’s not. And choosing the wrong type can create massive problems: from succession disputes to litigation, even the loss of family wealth.
Here’s a clear breakdown of the four core types of SMSFs in Australia and who they’re best suited for.
- DIY SMSF – ‘Set and hope’
This is the cheapest and riskiest option. Typically set up online for less than $1,000, a DIY SMSF often uses generic trust deeds and has no tailored strategy.
📍 Example: Peter and Lisa set up a DIY SMSF to buy ETFs. When Peter passed away, Lisa learned their binding death benefit nomination was invalid and the deed handed control to Peter’s brother.
🔴 Risk: No estate planning protection. Particularly dangerous for blended families or in the event of death.
- Standard SMSF – ‘Compliant but limited’
This is the go-to model for most accountants. It ticks compliance boxes but lacks flexibility for estate planning, control succession, or wealth protection.
📍 Example: Tim and Jodie run a compliant SMSF. When their son joins the fund at 18, the deed has no way to manage control or create intergenerational planning structures.
🟡 Use if: You want to keep things simple and don’t plan to involve multiple generations.
- Family SMSF – ‘Wealth shared across generations’
This structure allows up to six members, often parents and adult children. It supports pooled investing and centralised decisions.
📍 Example: The Rahmans, with five members, invest in a commercial property leased to their family business. All members have equal input.
🟢 Good for: Cohesive families building wealth together. Still requires careful documentation to avoid future disputes.
- Leading member SMSF – ‘Control, continuity, and bloodline protection’
This is the most sophisticated SMSF model. One or two leading members control the fund, while other members provide delegated authority (via power of attorney).
📍 Example: John, Mary, and their daughter Anna use this model. John is the leading member. When he passes, Anna seamlessly takes control without court delays. They also use SMSF wills and death benefit trusts.
✅ Best for: Families wanting strategic control, intergenerational wealth transfer, and airtight succession.
Quick comparison
| SMSF type | Control | Succession | Strategy level | Best for |
| DIY | Weak | Poor | Minimal | Budget-only users |
| Standard | Basic | Manual | Limited | Simple single-generation users |
| Family | Shared | Moderate | Strong | Families investing together |
| Leading member | Centralised | Seamless | Advanced | Wealth transfer + protection |
Final thoughts
Your deed is your fund’s rulebook. If you want to avoid disputes and ensure long-term control, a leading member SMSF should be your starting point.
Don’t guess your way through structuring. Choose based on strategy, not price.
