Challenges possible on binding nominations
From later this year, superannuation fund members will be able to challenge binding death nominations nationally in the Supreme Courts.
New South Wales has passed legislation that enables the nominations to be challenged, but a Commonwealth uniform succession act will be passed, possibly this year, to enable this to occur in all states.
Bartier Perry executive lawyer Chris Tsovolos said actions by the deceased fund member prior to death can be challenged.
“If the member did something within three years prior to their death, any nomination including that action can be challenged by another member or the estate,” he said.
“If successful, the benefit can be clawed back into the estate.”
It will mean members could have less say on where they want an asset to go on death, Tsovolos told the Kaplan Financial Adviser Roadshow in Melbourne.
“It can restrict the member’s ability to make a direction on where an asset will go, such as a business property going to a child working in the family business,” he said.
“It does mean a fund member is going to have less control because somebody else can have a say on their nomination.”
Another change to estate planning involving superannuation concerns the definition of a dependent relationship.
“Under the [Income Tax Assessment Act 1997] two persons, neither related by family, can have an interdependency relationship if they have a close personal relationship,” Tsovolos said.
“If they don’t meet these requirements, they can still satisfy the requirements by either suffering from a physical, intellectual or psychiatric impairment.” He said the two dependent parties don’t have to live together, so cases where a husband is in a home and dies will still enable the wife living in the family home to challenge a nomination.
It will also encompass same-sex relationships and separated marriages.
Tsovolos said ensuring trust deeds are amended to incorporate all the latest changes in law are important, as this document sets the operating rules for the fund.
“Superannuation funds in Australia operate as trusts, so the deed will say what can and can’t be done,” he said.
“So introducing borrowing into a superannuation fund cannot be undertaken unless the deed allows it.”
Recommended for you
Compared to four years ago when the divide between boutique and large licensees were largely equal, adviser movements have seen this trend shift in light of new licensees commencing.
As ongoing market uncertainty sees advisers look beyond traditional equity exposure, Fidante has found adviser interest in small caps and emerging markets for portfolio returns has almost doubled since April.
CoreData has shared the top areas of demand for cryptocurrency advice but finds investors are seeking advisers who actively invest in the asset themselves.
With regulators ‘raising the bar’ on retirement planning, Lonsec Research and Ratings has urged advisers to place greater focus on sequencing and longevity risk as they navigate clients through the shifting landscape.
