Good Afternoon Everyone,

There has been a lot in the news in the past week.  Surprising decision by the Federal Reserve boosting the stock market.Good luck to the Dockers tomorrow!
Below are some hints & updates on August economics and estate planning for Superannuation.

regards, Geoff

August Economic Update

It seems like investor’s received the news they were waiting for as the share market reached a five year high during the week and increasing  by 2.5% for the month of August. This went against a global trend. The share market has now recovered to levels not seen since prior to the global financial crisis. Whilst this is great news for those of you who are invested it is still wise to remain cautious due to the uncertainties that exist locally and internationally.

Estate Planning for Superannuation

I have attached a link to an article by Peter Hogan on the key differences between estate planning for Self-Managed Superannuation Funds (SMSF) and other superannuation funds.

The differences between estate planning for SMSFs and other superannuation funds arises because superannuation is not an estate asset. An estate asset automatically forms part of your estate when you pass away whereas superannuation can be paid to your beneficiaries in a variety of ways including via your estate. To have your superannuation death benefits form part of your estate assets you need to consider a number of options and these differ between SMSFs and other superannuation funds.

Superannuation can be paid as a lump sum directly to your dependents. It can be paid as a death benefit pension, reversionary pension to your financial dependents or it can be paid to a tax and asset protective testamentary trust via your estate. The option you choose depends on your individual circumstances, tax and superannuation legislation and the rules of your superannuation fund.

SMSFs allow for contingencies whereas other superannuation funds require you to lock in what is going to happen and predict the future.  SMSFs can also provide you with flexibility in allowing you to appoint a trustee of your choice.  You decide how to pay your benefits depending on what is best for your beneficiaries at the time you pass away providing ultimate flexibility. This flexibility is not as reliable with other superannuation funds and can also lead to an independent trustee deciding how your superannuation death benefits should be paid.

SMSFs estate planning flexibility brings with it added complexity. Recent court cases have occurred due to lack of planning and have resulted in costly estate disputes. If you do not carefully plan your superannuation death benefits it may also lead to unnecessary tax outcomes, payments to beneficiaries you have not chosen and family disputes.
Before deciding how to pay your superannuation death benefits from either your SMSF or other superannuation fund, consider:

  • The asset protection requirements of your beneficiaries;
  • The nature of the assets you have in your superannuation fund;
  • The taxation outcomes from paying the benefits;
  • and The rules and restrictions that are in place for your superannuation funds.

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Disclaimers & Disclosures

Geoff Ivanac is a Sub-Authorised Representative (No. 000309751) of Barsden Private Wealth Pty Ltd ATF The BPW Trust (ABN 41 153 930 799) trading as Barsden Private Wealth. Barsden Private Wealth is a Corporate Authorised Representative No.416315 of BPW Licensee Services Pty Ltd (AFSL 484 198).

The information provided on this website has been provided as general advice only. We have not taken into account any particular person's objectives, financial situation or needs. You should, before acting on this information, consider the appropriateness of this information having regard to your personal objectives, financial situation or needs. We recommend you obtain financial advice specific to your situation before making any financial investment or insurance decision.

  1. November 8, 2015

    – It is never too early to plan for your superannuation death benefit. Indeed, as superannuation funds enjoy certain tax benefits in taking out insurance policies on the life of its members, many funds provide a life insurance facility for members. The value of the policy proceeds on death will surely make the value of the superannuation death benefit worth planning for.

    • November 10, 2015

      Yes that is correct Michael. In most situations, you can have the best of both worlds, a tax deduction for the insurance premiums but also tax free where the benefits are paid to your financial dependents. However it is recommended that you receive advice before taking out the insurance policy and also have it reviewed annually as your circumstances change.

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Geoff Ivanac is a Sub-Authorised Representative (No. 000309751) of Barsden Private Wealth Pty Ltd ATF The BPW Trust (ABN 41 153 930 799) trading as Barsden Private Wealth.

Barsden Private Wealth is a Corporate Authorised Representative No.416315 of BPW Licensee Services Pty Ltd (AFSL 484 198).