Most people are aware of self-managed super funds (SMSF), yet less familiar with Family Super Funds (FSF). In this article we explore subtle variations between the two and identify how a FSF can be seen to improve family wealth outcomes.
Both Fund structures can have up to six members in total. In the case of a SMSF, these Funds do not require any of the parties to be related by blood or legal arrangement (such as adoption, marriage, etc). The otherwise unrelated parties may come together with a common purpose of growing their retirement wealth and pooling their super account balances to purchase assets. So long as each member is united in the investment objective we have seen this strategy work very well.
On the other hand, ’owners’ of a FSF will determine who will be members and therefore exclude any unrelated parties from participation, thereby maintaining wealth within the bloodline. This enables siblings, multi-generation, cousins, uncles/aunts and otherwise related persons to participate. This may also benefit the family group with their inheritance planning, particularly where some parties are financial dependants of others within the group.
A family group consisting of greater than six persons can still pool super account balances and build family wealth. By careful planning and implementation, establishing multiple FSFs and linking these via investment activities will achieve a similar outcome.
In addition to regular share and bond investing, the scope of investments FSFs can participate with are wide and varied, and include:
- Private businesses – including those which family group members have an interest in.
- Artificial Intelligence (AI) and technology themes – of interest to these groups may be grass-roots investment in emerging and innovative technologies.
- Blockchain and cryptocurrency.
- Precious and industrial metals – gold and silver bullion, platinum, palladium, lithium, copper, etc.
- Collectables – art, classic cars, stamps and numismatic, vinyl records, comics, etc.
- Geared investments – residential and commercial property, Australian and international shares.
- High income (option writing) and private credit strategies.
- Bulky assets – mining and other equipment for lease to operators; vending machines, etc.
- Specialised property – overseas (resort, tourism), farming, storage/parking, etc.
- Business Real Property – premises from which FSF/SMSF owners operate their business.
- ESG – Environmental, Social, Good Governance strategies. Have your super support your ethical intentions.
The team at Holzworth Partners comprising FSF/SMSF Specialist Advisers, Accountants, Lawyers, etc, will guide your actions. Reach out to us to learn more about how you can build wealth from these strategies.