Estate Planning and Superannuation Assets

Estate Planning and Superannuation Assets are important considerations in Australia, where compulsory superannuation is now held by almost every adult – and certainly by all who have worked full-time any time in the years since it commenced in the 1980’s. One of the measures of the success of an estate planning strategy is the effectiveness by which the value of the assets (‘the right amount’) transfer from the testator to the nominated beneficiaries (‘the right hands’). As was mentioned in an earlier article in this series, superannuation assets may not always be estate assets.

When determining who should receive your superannuation assets it is important to consider the taxation consequences for disbursements from a superannuation account. Generally speaking a dependant of the testator will be taxed more favourably than a non-dependant. The method of payment will also have taxation implications.

The options open to you as to who can be nominated and how payment may be made – and how binding that nomination of beneficiaries will be on the trustee(s) – will be determined by the trust deed governing your particular fund.

Superannuation death benefit payment methods –

Lump sum

• Direct payment from the fund to the dependant avoids the estate administration process as they become non-estate assets. (This has the added advantage that if the estate is challenged, the superannuation assets may avoid being caught up in the challenge.)
• A greater degree of flexibility is facilitated if payments are made to the estate to be passed to a dependant through a testamentary trust. This can give the beneficiary the ability to tax plan and protect the inheritance asset from attack.
• If you want your super assets to go to a former spouse or to a non–dependant (for tax purposes, such as an adult child), your benefit will have to be paid to your estate and your Will written to make the bequest.

• In some cases (limited by provisions of the trust deed), a self-managed superannuation fund (SMSF) can be used to pass benefits directly to the account of another fund member.

Pension (available only to dependants)

• An allocated pension can be paid to a dependant minor: under current law the minor will have access to a lump sum at age 18 – and will have to take a lump sum when they reach 25 years of age. There is an exception for beneficiaries with a permanent disability.

• If the testator’s superannuation account is in pension phase it can be continued as a reversionary pension to a dependant.

Where can I get help with Estate Planning?

The Continuum Financial Planners Pty Ltd Estate Planning service offers clients:

• working with them to prepare the detailed information required for their appointed estate planning specialist lawyer; who can then
• consider the client’s individual detail in light of their estate planning experience so as to design a plan appropriate to the client’s present and known likely circumstances; and where needed
• provision of access to our referral connections of such professionals (to whom we are happy to refer you to match their expertise with circumstances such as your own).

The experienced advisors at Continuum Financial Planners Pty Ltd are available to guide you through the preparation of the information to refer to a legal adviser (estate planning specialist) and where necessary, a taxation specialist, so as to ensure that all relevant detail is provided to them to ensure your estate planning strategies are resolved as effectively as possible. For an appointment to get your estate plan started, call our office (on 07-34213456), or use our website Contact Us facility.

More about Estate Planning…

This is the tenth in a series of 13 articles on the topic of Estate Planning: further articles in the series seek to bring clarity to some of the issues and implications to be dealt with in fulfilling the three key considerations of Estate Planning – getting the right amount of money, to the right beneficiaries and at the right time; and to prepare you and your family to understand the final plan when drafted. The remaining articles consider –

• Estate Planning outlined;
• Estate planning and flexibility in the modern Will;
• Asset protection using Estate Planning;
• Superannuation death benefit nominations and Estate Planning;
• Estate planning and Business Succession planning;
• Capital Gains Tax impact on estate planning;
• Estate planning and family loans;
• Estate planning and company-owned assets;
• Estate planning for a SMSF trustee;
• Estate planning with a testamentary trust;
• Estate planning for younger children; and
• Estate planning dependent on a valid Will.

(This series was first posted to our website over a period from late-2011 through early-2012; it has been refreshed, updated and re-posted in February 2015.)