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Estate Planning Review Required Now


A legal firm has called on SMSF trustees to review their estate planning strategies to ensure death benefits are managed in the most prudent fashion in light of the $1.6 million transfer balance cap to be introduced on 1 July and the effect it will have in this area.

“Now is the time to review your estate planning strategies and make sure your death benefits nominations are up to date,” Paxton-Hall Lawyers director Paul Paxton-Hall said.

“Many super fund members will need to restructure their plans to minimise any adverse tax implications and ensure their estate planning goals can be achieved.

“Good estate planning can help reduce the amount of tax paid by beneficiaries and ensure death benefits are used to their full potential.”

Paxton-Hall specifically noted SMSF trustees will be faced with new challenges due to the nature of the super reform rules in regard to the $1.6 million transfer balance cap.

He warned the situation had more dimensions to it than just managing the amount of money in the retirement phase of an SMSF and how death benefits were paid out had to be taken into account.

“From July 1, if a super fund member receives a death benefit payment in the event their spouse passes away, this amount will count towards their total transfer balance cap,” Paxton-Hall noted.

“If the surviving spouse’s account then exceeds $1.6 million and breaches the cap, they will need to withdraw the excess as a lump sum or commute part of their pension back into an accumulation-phase account, which attracts a 15 per cent tax.

“In this case, people will need to consider how their accumulation account or benefits that are forced out of the superannuation system will be dealt with in their estate plans.”

Darin Tyson-Chan

Self Managed Super

5 June 2017


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