Superannuation and estate planning



Superannuation and its link with estate planning has taken a big step forward. This is a result of both 2017's superannuation reforms and the increase in the number of cases being contested before the courts and tribunals.

In his article in The Tax Specialist, Graeme Colley looks at the superannuation side of estate planning, and discusses who is eligible to receive death benefit payments and the issues with a member's transfer balance cap.

His article is excerpted in this post.

Superannuation provides a useful vehicle as part of the management of a client's estate planing.

It is however not exhaustive due to the limits imposed by the introduction of the transfer balance cap and the value of death benefits that can be retained in superannuation.

It is essential that an adviser understands how death benefits can be retained in superannuation and who is eligible to receive lump sums and pensions.

The validity of death benefit nominations, provisions of the fund's trust deed, and the last will and testament of the deceased are material to making sure that the right amount is paid to the right person at the right time. 

When an SMSF is established, and when any change to membership occurs, it is important that the member trustees carefully consider the approach that would be taken in the event of their death or disability. Properly addressing these issues in advance can make things a lot easier for other member trustees, and family.

Estate planning is a term generally used to describe the forward planning of the management of a person’s financial affairs following death and the distribution of the estate to potential beneficiaries. As such, estate planning involves more than simply having a properly drafted Will and generally requires consideration of all the assets and property that a person owns or controls at the time of death. This includes considering how a person’s superannuation benefits will be treated on death.

When used appropriately, SMSFs can be an effective tool to assist with the management of a client’s estate planning needs on an ongoing basis, with respect to their superannuation benefits.

Graeme's article is designed to provide an overview of key estate planning considerations involving superannuation and SMSFs. Estate planning issues can, of course, be highly complex in practice and legal advice should be sought to address any issues of concern or matters of interpretation.

The article looks at the obligation to pay death benefit, and who can receive a superannuation death benefit.

Providing a definition of a legal personal representative, it looks at who is a dependant under superannuation law, in what form will the death benefit be paid, and restrictions on the payment of death benefits in the form of pensions

Graeme also looks at who decides who will receive a superannuation death benefit, and issues with nominations.

He covers issues with binding nominations, taxation issues of death benefit payments, and reversionary v non-reversionary pensions.

You can read the full article here.

Graeme Colley is the Executive Manager, SMSF Technical and Private Wealth at SuperConcepts. 

In that role his responsibilities include the provision of technical and education services to private wealth clients, maintaining the company’s media and corporate profile and its advocacy with government. 

Graeme has considerable taxation and superannuation experience gained from senior positions in the ATO, as an Assistant Commissioner of the Insurance and Superannuation Commission, ING as well as leading fund managers and consultants, including Macquarie Bank, Mercer and Chartered Accountants ANZ. 

A joint author of the CCH Master Financial Planning Guide and Financial Planning in Australia, his academic experience extends to the ATAX Masters course at UNSW and the Master of Commerce (Financial Planning) course at UWS.

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