Estate Planning and Binding Death Benefit Nomination

There is no doubt that Self Managed Superannuation Funds (SMSF) have estate planning advantages over retail and industry funds.

The primary reason that members establish SMSF is to have more control over their superannuation rather than leaving it all in the hands of the fund manager(s).

One aspect of the control feature of a SMSF is estate planning or more simply who gets the money when you die.

With regard to death benefit many experts recommend that members prepare Binding Death Benefit nomination to ensure certainty that the person(s) that they want to receive their superannuation actually receive it.

However, there can be tax implications of the superannuation being paid to an individual upon your death. If the funds are paid to a spouse or a financial dependant of yours there is no tax. However, if the superannuation is paid to a child over 25 at the time of your death that does not live at home nor has their own career then this child may receive only 85% of your superannuation allocation.

It is our experience that when people set up a Self Managed Superfund they may allocate their superannuation solely to their children. However, at the time of setting up the fund and the child may be under 18 year old and living at home. It is critical that your Binding Death Benefit is periodically reviewed particularly when your children are no longer your financial dependants.

For more information on Estate Planning and Binding Death Benefit nomination please contact Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.

The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.  It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.