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