Estate Planning and Self Managed Superannuation Funds (SMSF)
Estate Planning is making sure that your finances are in good shape if you die or become incapacitated. Most people associate the term “Estate Planning” with death only, this is not the case.
Equally common, people associate superannuation with retirement and their Will with death. However, more people than ever before are using their Self Managed Superannuation Fund (SMSF) as their estate planning vehicle.
Not so well known that is the Will does not control the superannuation benefits. Superannuation does not automatically form part of your estate. That is, your superannuation benefits may be paid out before probate is granted on your estate. Getting probate can sometimes be very time consuming and highly complex.
Apart from paying your superannuation to your estate you could choose to allow your SMSF to pay a death benefit to your spouse, a child including a biological, adopted, or step child, or any other person whom you are in an inter-dependency relationship.
If you choose to pay your superannuation benefits to a spouse or financial dependent then those payments to that or these dependent will be tax free.
Superannuation benefits are split between taxable and tax free components. The tax free component is basically all contributions you have made to super which you have not claimed a tax deduction for. The taxable component is the remainder.
This is a benefit of a SMSF, you can leave tax free income streams to dependent beneficiaries with control around how long they receive the income stream and when they are entitled to receive a lump sum. In addition to this, SMSF can make binding nominations that do not lapse, unlike commercial superannuation funds which have to be continually updated.
These are just some of the strategies that can be employed within a SMSF for the benefit of Estate Planning purposes.
Quinn Financial Planning has the expertise to help you build your wealth. For more advice on investing in a Self Managed Super Fund, please contact Peter Quinn here at Quinns by submitting an online enquiry or calling us on 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.