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SMSF Setup: Mistakes To Avoid

As you may have heard, there are a lot of benefits in taking control of your super and determining to establish a self-managed super fund (SMSF). However, like most things in life, doing some research and planning in advance can save you future headaches and ensure you get the outcome you want.
Following are few common mistakes for you to avoid. Although some may seen obvious to you, but there are many people who get attracted to the lowest price and rush in.
1. Getting the right advisers on-board
DIY super funds can be pretty difficult, so if want to maximize your retirement savings you should seek the help of an SMSF specialist advisor. A good SMSF specialist advisor will be able to assist you in creating the best investment strategy as well as assist you in navigating the variety of super and tax laws to keep you on the right track to achieve your retirement objectives.
To find a reputable SMSF specialist advisor, do your research. Ask people that you know for referrals and be aware of the fine prints on those SMSF advisors offering a 'free set up' and/or quote to do everything under $1,000 per year.
2. Choosing the wrong type of trustee
When implementing your SMSF, you need to consider whether you will be the director of a corporate trustee or an individual trustee. This is essential as you will be the responsible for managing your SMSFs affairs.
There are pros and cons of choosing either trustee options, but usually choosing to be the director of a corporate trustee has more advantages than choosing to be an individual trustee. The two main reasons are: it reduces your personal risks to litigation and loss of assets and the SMSF penalty regime created by the ATO unfairly penalizes individuals trustees over a corporate trustee.
3. Allowing time for rollovers
Some people tend to make plans for their SMSF's first investment before it even has the cash to invest. This is a common fact to see with property investments where contracts start to enter into with tight settlement deadlines. Keep in mind, once you implement your SMSF it takes time for ATO and other regulatory parts to confirm its official registration and update their databases.
4. Ensuring insurance cover continues
Typically your super fund will have insurance cover for things such as death and disability and maybe income protection. When you manage your super among super funds, the insurance cover ceases hence, it is vital that you understand what insurances you have and what you will need.
5. Not knowing the rules
You should keep in mind that as a trustee, it is your responsibility for your SMSF to comply with the law – even if you use an SMSF specialist advisor to manage your SMSF. So, get to know the basic investment, contribution and withdrawal requirements and use them when you need.
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