SMSF rules are such that a minimum of two individuals are required to make the cut. On the other side of the spectrum, four is the maximum number a single fund can have. In more general cases, two fund members (read trustees) of an SMSF are spouses.
Child as a co-trustee
Pragmatically speaking, no one likes to shy away from the thought of death. It is a logical conclusion to life and a pretty inevitable one at that. So, spouses always want to add their children as a co-trustee to sail through the legal mesh that may be caused by their premature departure. But the crux question is: is it a good idea?
Compliance and tax related paperwork
As a first, the various compliance schedules and tax related paperwork of SMSF are so cumbersome that it is not an easy job to manage it at all. If one of the adult children has a flourishing career that demands him or her to live in a different city, then the aforesaid management becomes even more difficult and may put the SMSF arrangement in jeopardy.
Practical arrangement
Another thing is that while you are eligible to add up to three kids as co-trustees, in view of a practical arrangement; adding one is the best choice. This, however, can aggravate tension between siblings in due course of time. Further, the chosen co-trustee may not be comfortable with the throne on the head because it makes him suddenly accountable for all the gaffes in compliance.
I have always recommended a corporate trustee structure. It can be your best bet whether you want smooth management of affairs, passing of estate or reduction of penalty amount in cases you are charged one.
