Superannuation is fast becoming the major investment for Australian families. Under current legislation all employees receive 9% of their annual income in a form of compulsory contributions from their employer.
Self Managed Super Funds (SMSF) have an estimated $1 trillion under investment in Australia and there are over 470,000 SMSFs in Australia having almost 900,000 members (*Source ATO website).
There is a common misconception that Superannuation can be distributed to beneficiaries via a person’s Will. In certain circumstances this is correct, but more commonly a member’s Superannuation account balance is paid to a Superannuation Dependant, that is, the deceased’s person’s spouse, child or financial dependant. These people are known as Superannuation Dependants. In the absence of a Superannuation Dependant, the Superannuation (and any associated life insurance) is paid to the member’s Estate.
With bigger member balances in Superannuation, an increase in marriage separations and complex blended family arrangements, Superannuation and SMSF Estate Planning is essential in today’s economic environment.
OMB Estate Planning specialists provide professional advice regarding your Superannuation or your SMSF. We are able to arrange a variety of solutions or alternatives to meet your particular family circumstances so as to ensure your dependants (or your Estate) receive your member account benefits on your death.
OMB Solicitors can prepare Binding Death Benefit Nominations (either lapsing or non-lapsing), advice on your SMSF Trust Deed and strategies to ensure your Superannuation member benefits go to the right person at the right time. Binding Death Benefit Nominations are available for most Superannuation funds. A Binding Death Benefit Nomination takes away a Trustee’s discretion as to who the member’s Superannuation benefits are to be paid. It is important with a SMSF to read the terms of the Trust Deed to ensure the deed allows for binding nominations to be issued. The Trust Deed may also have strict rules as to how the binding nominations are to be prepared and accepted by the fund's Trustee.
We also advise clients on appropriate strategies to ensure your Superannuation does not transfer to your Estate where there is a risk that your Estate will be Contested.
It is an essential part of your Estate Planning strategy that your Superannuation is dealt with properly as a separate and distinct asset class from other property you own because your Superannuation is controlled by your SMSF Deed and/or the Superannuation Law.
There are also tax consequences depending on whether the Superannuation member benefit is paid as a pension or a lump sum. Current legislation provides strict guidelines and harsh tax consequences if your Superannuation is paid to a non-superannuation dependant.
It is important you obtain professional advice before signing any legal document relating to your Superannuation or your SMSF.
Contact our Superannuation Specialist Partner, Richard Dawson, with any queries you have regarding your Superannuation Estate Planning.
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Will & Estate News
See attached news articles by OMB for more information and recent developments in this area of law: