SMSFs offer unique estate planning options
When it comes to estate planning, self-managed superannuation funds (SMSFs) give members options that are not available through a public offer super fund, HLB Mann Judd head of wealth management, Michael Hutton believes.
Hutton said confusion around the role of super in estate planning had seen estates paying unnecessary tax, while balances were not distributed as the deceased member had wanted.
"Properly managed, in addition to its main role of helping ensure a comfortable retirement, a SMSF can provide excellent estate planning benefits," he said.
"However, anyone leaving a large superannuation balance cannot rely solely on a Will to ensure their intentions are carried out. To allow them to implement the best strategy, they must understand the tax implications of balances paid out to non-dependents, amend the SMSF Trust Deed if necessary, and have a Death Benefit Nomination as well as a Will.
"Unlike other assets, superannuation is held in trust and is not owned directly by the member of the fund. Consequently, it usually falls outside the scope of a Will. As superannuation monies can represent a large proportion of a person's wealth when they die, it is important to consider it in any estate plan. This requires understanding the rules and their implications," he said.
"With SMSFs, it is possible for death benefits to be paid as a pension to a death benefits dependent rather than as a lump sum, which means the fund doesn't need to be wound up. The fund's investment portfolio can remain intact and the lifespan of the SMSF extended — a benefit not always available with public offer superannuation."
AUTHOR
Nicholas O'Donoghue
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