22 Dec Estate Planning in Your SMSF
There will never be the “right time” to determine how your assets and finances will be distributed after you die. Although a subject that often gets pushed aside for emotional or other trying reasons, it’s something that needs to be done. Planning your estate will give you peace of mind and attract minimal tax once transferred over to your beneficiaries. Estate planning does not only include assets, but also insurance, a will and superannuation benefits. It can also list situations which could occur while you are alive. For example, you can appoint a power of attorney to make decisions should something happen to you in which you are no longer able to make wise choices. Your will is completely separate from the superannuation benefits and deed. The superannuation is often the most significant asset of the estate; therefore, it essential to carefully plan how it will be distributed following your death. Your 2 options are a binding or non-binding death nomination. A binding death nomination will allow you to choose who will receive your superannuation benefits. This will be legitimate for three years; after which it will need to be renewed. By Australian law, the trustee of your estate must pay the beneficiaries the amount listed. This can be changed or updated at any time. Keep in mind that should the chosen beneficiary die or divorce you, this documentation becomes void.
Things to consider with a binding nomination:
• You can transfer funds to an executor who will distribute the assets accordingly.
• Only certain people can receive superannuation benefits upon your death. These include a spouse, child, legal representative, someone financially dependent on you or a person with who you have an interdependent relationship with.
If you do not have a binding nomination, your trustee will choose who will receive your superannuation benefits and how much. This is considered a non-binding nomination. There is no expiry and does not need to be renewed. Keep in mind that in the past, many people have had a great deal of troubles with this and have had to consult legal advice or seek the courts for a final decision. Estate planning is not something to take lightly. If you have an SMSF and have not yet developed an estate or death nomination you should do so. Otherwise, significant legal, financial, tax and family related consequences can occur.