However unpleasant it might be to contemplate, death is one of life’s realities, which makes estate planning an important consideration when it comes to self-managed superannuation funds (SMSFs).Often people want to know about how and when benefits are paid as well as the tax that might apply to these benefits.
Read on for 10 estate planning tips for SMSFs:
1. Estate planning isn’t only about death
Estate planning technically involves making sure your family’s finances will be in good shape if you die or are incapacitated in some way — either temporarily or permanently disabled —and unable to work.
While this article focuses on death benefits, planning for different types of disability is vital.
2. Super is not part of your will
In the first instance, your super benefits don’t automatically form part of your estate. This can mean that your benefits might be paid out before probate is granted on your estate. This aspect can be important to make sure your family isn’t worse off financially. Getting probate can sometimes be time-consuming and complex.
Your super can be paid to your estate. You just need to know how to make this happen.
3. Your super fund’s trust deed is paramount
The key to knowing how your death benefits will be paid is governed by your SMSF’s trust deed. You must carefully review this document and operate within its rules.
The more explicit the trust deed is, the less likely that disgruntled survivors can challenge who is going to receive your death benefit.
4. Pay attention to super fund laws and death benefits
Apart from your estate, the laws allow an SMSF to pay a death benefit to a spouse, a child (this includes a biological, adopted, step- or surrogate child) or any person with whom you’re in an inter-dependency relationship.
Your SMSF trust deed can specify fewer people than this list of potential beneficiaries but it can’t allow a wider range.
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Filed under: SMSF Administration Tagged: estate planning, self managed superannuation funds, SMSF
