Estate & Succession Planning

Estate Planning Articles

Feb 052019
 

When it comes to estate planning, most clients know how important it is to have an up to date will. What a lot of clients don’t know is that their biggest asset may not be covered by the will.

It used to be said that the family home was the biggest investment most people ever made, but that’s not always the case anymore. These days, your biggest investment could be your superannuation fund, and it’s not an estate asset.

A superannuation fund is a type of trust that holds payments made by your employer, and any contributions you make, on trust for you as the beneficiary. This trust is under instructions from you to invest that money so that it can support you in your retirement. Unlike other types of trusts, the circumstances in which a superannuation fund is able to make payments to you are strictly controlled by legislation.

As a trust, the property in your superannuation is not owned by you. The trustee has legal title of the property and discretion to use the funds and make payments to you subject to any instructions you have given, and the relevant legislation. For this reason, your superannuation is not an asset of your estate and requires separate directions to provide the benefit to others when you pass away.

Most public and industry superannuation funds provide for a member to make a Death Benefit Nomination. The nomination can be made on a binding or non-binding basis and, depending on which type of nomination you make, the trustee either must follow your instructions or may take them into consideration when paying the death benefit from your superannuation fund.

If you have a Self-Managed Super Fund (SMSF) the payment of a death benefit is dealt with in the trust deed of your SMSF. There are two useful ways in which the SMSF deed can be structured to deal with your superannuation. The trust deed can mandate that a nominated beneficiary receive the death benefit payment, or it can give a nominated person such as your executor or the trustee of the SMSF the discretion to decide who should receive the benefit.

The option you select for your SMSF has an important impact on the tax consequences of the distribution of your superannuation. If you give the trustee or another person the discretion to decide how and to whom the amount is paid it can be directed to minimise tax and maximise the benefit to your family, such as by being paid into the superannuation of your spouse or to a trust fund for your minor children. You can leave guidelines in the trust deed of your SMSF to help ensure the benefit is given in the most efficient way possible.

You should ensure you have a current Superannuation Death Benefit Nomination. 

If you have superannuation with a public fund, your binding death benefit nomination with a Superannuation Industry (Supervision) Act regulated fund will expire after 3 years (Regulation 6.17A SIS Regulation). 

If you have superannuation with an SMSF, make sure the nomination complies with the requirements of your SMSF trust deed, that can require particular words or signing , for example, two witnesses to the nomination.

High Value Individuals often choose to make a “testamentary trust will” (including a discretionary or family trust in the will) as these have asset protection and potential tax benefits. It is critical that you structure the testamentary trust will correctly to ensure superannuation death benefits can be applied with maximum tax effect.

The decision is not straightforward.  The appropriate nominees for, and form of, your Death Benefit Nomination dependants or your estate) will depend on expert financial, superannuation, tax and legal advice. 

The key people that can assist you decide about each aspect are set out below and you will need advice from all those people to make the correct decision:

Financial consequences for you, your estate and beneficiaries Financial Advisor
Appropriate Nominee(s) such as spouse, dependant, estate Super/Tax Advisor
The legal form of the Nomination Legal Advisor

 

Remember, after the family home, Superannuation is often your largest asset, and it is not an asset in your estate.  The lesson: get good estate planning advice from your financial advisor, your superannuation and tax advisor, and from your legal advisor.  Get the advice now, because no advisor, no matter how good, can predict the time when it will be too late to make the correct decision.

Contact Peter McNamara today for estate planning advice. 

 

Jan 222019
 

The unanimous High Court ruling in Thorne v Kennedy [2017] HCA 49 highlights the broadened circumstances in which financial agreements can be set aside in Australia, casting considerable doubt on agreements that are heavily weighted in favour of one party. The court set aside two financial agreements that were made pursuant to Part VIIIA of […]

Oct 232018
 

Peter McNamara has previously warned that you get your superannuation death benefits sorted:  http://www.cml.com.au/wills-smsfs-and-binding-death-benefit-nominations-get-yours-in-line Now a recent case shows that you should get your powers of attorney sorted as well. What happens to your superannuation if you lose capacity?  Your superannuation death benefits will be dealt with as set out in the superannuation trust deed.  Most […]

Jul 302018
 

Well, Barnaby Joyce has sure gotten our attention recently.  It’s as old as the hills:  Two people get together, one is older and already has kids, and the younger one is female. And a similar story should get our attention this week.  In this case, one man was older, and very rich, while she hardly […]

Jul 132018
 

Been left out of a will? Not received what you believe you are entitled to receive? You could be eligible to make a family provision claim. Family provision claims must be made within 12 months of the death of your loved one and can only be made by ‘eligible persons’. This includes current or former […]

Sep 112017
 

Agreeing to be executor of an estate means accepting obligations to the tax office. As the executor, you are answerable to the taxpayer for all of the estate's income and take over the deceased’s responsibilities for launching tax returns. Until the estate’s assets and income have been fully distributed, you will have to work out […]

Sep 082017
 

Who pays land tax? If you own, or jointly own, any property in NSW that is not your principal place of residence (your home) and the total taxable value of your land exceeds the land tax threshold, then you may need to pay land tax. How is land tax calculated? If your total land value […]

Sep 012017
 

Where should you keep your will? Keep your will in a safe place. It is preferable not to keep the will yourself in case it is mislaid. If the will is mislaid, it may be presumed to have been revoked. Solicitors hold wills on behalf of clients, usually at no charge. You should keep a copy […]