Superannuation & Estate Planning
In the context of estate planning, superannuation cannot be ignored. Consider the following:
- Any person who has been in the workforce from 1992 will have a superannuation interest as a result of the introduction of compulsory superannuation contributions.
- Given that there are still significant taxation concessions which apply to superannuation, more wealth is being transferred out of individuals’ names and into superannuation structures.
- In many cases, a person’s superannuation has eclipsed their family home as their most valuable “asset”.
- Several trillion dollars has been invested in superannuation in Australia.
It is often not recognised that superannuation assets will not form part of a person’s estate on their death. Superannuation assets will only form part of a person’s estate if the superannuation fund (generally following the exercise of a discretion on the part of the trustee of the superannuation fund) pays the deceased member’s benefits to the estate.
Therefore, sometimes a person’s will has no direct impact as to how a deceased’s superannuation death benefits are distributed.
Obtain clear and detailed advice as to:
- who can receive superannuation assets;
- in what forms the superannuation death benefits can be paid;
- who will make the decision as to whom, and how, the superannuation death benefits are to be paid;
- how to give effect to an estate plan in relation to superannuation.
Once the above factors are taken into consideration, the following can be determined:
- The rules prescribed by the superannuation fund trust deed and whether, in the case of a self-managed super fund (SMSF), the rules of the trust deed need to be amended.
- The use of a Binding Death Benefit Nomination Form which offers an opportunity to a member of a superannuation fund to nominate which eligible recipients (i.e. the member’s surviving spouse, children, financial dependents or his or her estate) ought to receive the member’s superannuation assets.
- In the case of an SMSF, who will control the SMSF following the death of a member or trustee of the SMSF.
- Whether provisions need to be made in the will to deal with any superannuation benefits which may be paid to the estate in consequence of the trustee following a binding death benefit nomination or the trustee exercising a discretion to pay the superannuation benefits to the estate.
Charles Beresford is a partner of Clelands Lawyers in Adelaide, South Australia, practising in Wills, Estates & Succession Planning law.