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phone CFL Financial 07 3328 8988
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If you’re a busy Professional and you feel like you’re not building your wealth fast enough and you want smarter ways to utilise your cash flow, this guide is perfect for you. Clients who have used our strategies have the peace-of-mind knowing they have a ‘game plan’ for financial abundance.

The advantages and disadvantages of family SMSFs

Posted on Mar 21, 2016 by CFL Financial

Many small business owners who run a family business and are nearing retirement face the significant decision of whether to include their adult children in their self-managed super fund (SMSF) as part of their personal and business succession planning.

Including children in a family SMSF can have a critical impact on family relationships and finances, especially if parents and adult children work together and share ownership of a family business.

While potential benefits exist through well-planned intergenerational SMSFs, it is crucial for owners to compare the possible advantages and disadvantages of intergenerational SMSFs.

Potential advantages

A popular strategy among family business owners is to hold their business premises in a family SMSF indefinitely so the ownership and management of the business can pass to the next generation. This strategy can also help build-up enough assets in the SMSF to be used to pay out the parents’ retirement and death benefits if necessary.

Having two generations of a family in the same SMSF means a fund’s fixed costs are shared over a greater number of members.

Including adult children in ageing parents’ SMSF can help when making administrative and investment decisions for the fund. For example, parents can grant their children the authority to become their enduring power of attorney to make any financial decisions should the parents lose their mental capacity.

Potential disadvantages

Family conflicts can include disagreements over investment choices or family business decisions, break-up of parents’ or adult children’s marriages or even personality clashes. Family conflicts can also trigger the division of fund assets and, sometimes, the forced sale of fund assets.

Differences in investment goals and ideas can make running an intergenerational SMSF quite difficult. While it is possible to run different investment segments for different members depending upon a fund’s trust deed, this can add further costs and complications.

The four-member limit on SMSF membership can be quite an obstacle for families with three or more adult children. A way of dealing with this limit is to have multiple intergenerational SMSFs within the same family, which are called “parallel” funds.

Under such an arrangement, parents are usually members of all the family’s SMSFs. The funds typically have a share in the same assets such as business premises.

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Retirement-in style

Retire in style checklist™

There are a few reasons why Business Owners need a Retire In Style Checklist

If you’re a successful and Motivated business owner, and want to set yourself up for retirement, this guide would be perfect for you. My clients who follow these 3 simple steps live with comfort, security and the peace of mind that financial success brings.

Retirement-prosperity-thumbnail

The Retirement Prosperity Guide™

Make sure you don’t miss out on the Retirement Prosperity Guide

If you’re a busy Professional and you feel like you’re not building your wealth fast enough and you want smarter ways to utilise your cash flow, this guide is perfect for you. Clients who have used our strategies have the peace-of-mind knowing they have a ‘game plan’ for financial abundance.

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Phone: 07 3328 8988
Fax: 07 3328 8999

Office Location:
Level 9, 360 Queen Street
Brisbane
QLD 4000

Postal Address:
GPO Box 2468,
Brisbane,
QLD, 4001

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