Tax Effective Estate Planning – SMSF

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Superannuation is now commonly the most significant asset of an individual after the main residence and as a result is increasingly important when putting together a tax effective estate plan.

What is not commonly known is that superannuation interests do not automatically fall under the individual estate assets on death and therefore do not automatically fall under the directions of your will.

An ineffective estate plan for SMSF can lead to unintended consequences, including significant tax payable, and in the worst cases a transfer of wealth to a beneficiary that was not intended to benefit under the will.

To protect your wealth, some of the considerations that should be made when preparing a tax effective estate plan for your SMSF are:

How are the super assets transferred on death:

  • Lump sum death benefit
  • Death benefit pension
  • Reversionary pension

Who receives the assets from the super fund, and what are the tax consequences:

  • Who is entitled to receive the assets
  • Death benefit (tax) dependent
  • Death benefit dependent (SIS)
  • Legal personal representative (LPR)/Estate

How are the trustees directed to deal with the assets:

  • Reversionary pension
  • Binding death benefit nomination (non-lapsing)
  • Binding death benefit nomination
  • Trustee discretion under the rules in the deed

Strategies to reduce “death tax” payable by certain beneficiaries (including adult children):

  • Re-contribution strategies
  • Multiple super interests
  • Super proceeds trust
  • Gifting during lifetime
  • Payment directive strategy

 

Tax is obviously not the only consideration to be made when forming an effective estate plan, however the correct planning now will help you protect your wealth in the long term, and maximise the assets available for your loved ones.

If you would like more information on tax effective estate planning for SMSF please contact Chris Smith.

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OUR DIRECTORS

Chris Mandzufas

Chris Mandzufas

Chris has a diverse range of skills and experience as a result of providing accounting, taxation, advisory board and management consulting services to owners and directors of fast growing businesses.

Chris Smith

Chris Smith

Chris Smith has been a member of the Chartered Accountants Australia & New Zealand since 2006, a member of the Tax Institute of Australia since 2013, and a registered Tax Agent since 2018.

Tony Monisse

Tony Monisse

Tony’s key focus is the integration of strategy and financial management. To this end he has developed tools and process that facilitate this integration, including business modelling, target setting and rolling cash flow forecasts.

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