Over the past 20 years or so, about $1.7 trillion has accumulated in superannuation funds across Australia. Only Denmark holds more per capita in super. As a result, superannuation is often an individual’s largest asset, often surpassing the family home.
Self Managed Superannuation Funds (SMSFs) have become increasingly popular and account for a large chunk of the Australian super pie. Binding death nominations and control of SMSFs are important aspects of estate planning.
This can be a tricky area and if appropriate measures are not taken, a member’s super may end up, for example, with an estranged child or to one child to the detriment of other siblings. There have been many court cases in the past few years in this area.
As part of the estate planning process it is vital that SMSF deeds are reviewed and discussions had with the client about control of the SMSF after their death to ensure that their death benefits are paid as they wish.
For example some SMSF deeds do not allow for binding death nominations. A deed’s rules can be updated to rectify this.
A further example is a delay in transferring control of a SMSF with a corporate trustee can hold up the payment of death benefits. A way around this is to amend the constitution of the corporate trustee to allow for a replacement director on the death of a member. The company can then continue and pay the death benefits without delay.
At JMA Legal we place great importance on reviewing the client’s super deed as part of the estate planning process to address the issues raised above. We have our own SMSF deed that is regularly reviewed to ensure compliance with legislation. With estate planning in mind the deed allows for binding death nominations to be made either in a member’s will or by the use of a separate binding nomination form.
Author: Linda Alexander
This article is general information only and should not be relied on without obtaining further specific information.