Suite 8 / 260 Auburn Road, Hawthorn 3122
Phone: 03 9214 4100
Fax: 03 9818 6008
enquiries@trumpetfinancial.com.au
 
 
eWombat Search
  LATEST FINANCIAL NEWS
 
Hot Issues
'Huge' professional risk in SG delays, big four firm warns
What a financial adviser can add to your portfolio's returns.
ATO updates crypto guidance
Reverse mortgages: Short-term gain, long-term pain
ATO set sights on 27,000 funds in ongoing crackdown
ATO zones in on hundreds of newly created reserves
A dynamic approach to retiree spending and drawdowns
Your investment freedom-maker
Living expenses for retirees on the rise
Still a long and bumpy road to travel on the way to a U.S.-China deal
Smart spouse investing
How financial advice helps create wealth.
What the ATO will be keeping an eye on in FY19
This information will turn you into a fireside expert.
Examining the S in SMSF
Trade tensions to choke global growth: Moody’s
Tools for budgeting, cash flow, Super and more ….
Statistics show SMSFs not just for the rich
SMSFs lose thousands in property, investment scams
The good, bad, and potentially ugly for SMSFs
What politicians use to tell you how Australia is going.
Estate planning in the new environment
ATO issues alert on super, tax scams
SMSFs: Our 'hardest' jobs
Articles archive
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Why SMSFs want estate-planning advice

An estimated 77,000 self-managed super funds (SMSFs) have unmet needs for advice on estate planning.



     


 


The 2018 Vanguard/Investment Trends SMSF Report confirms that estate planning is among the highest unmet needs for advice. This equates to 13 per cent of SMSFs at the time of the surveys – a percentage that would be markedly higher among funds with older memberships.


Further, the research found that 10 per cent of SMSF trustees had concerns about the ability of other members to manage their super funds following the death or serious illness of the most dominant fund member.


The recognition of tens of thousands of SMSF trustees that they need professional guidance with their estate planning is driven by an array of factors. These include the burgeoning number of baby boomers nearing or already in retirement, the large proportion of retirement money held by SMSFs, and greater longevity.


Some 47 per cent of SMSF members were aged over 60 in March 2018 and 20 per cent were aged over 70, according to tax office statistics released over the past week.


SMSFs hold almost 60 per cent of overall superannuation assets invested in retirement products, according to the Superannuation market projections report 2017, published late last year by consultants and actuaries Rice Warner. This percentage has been rapidly growing.


As at least a starting point for estate planning, it is critical for SMSF trustees (together with all super members) to understand who is eligible to receive their superannuation death benefits. Another fundamental is to understand how different eligible beneficiaries may be taxed differently.


Superannuation benefits cannot be left indefinitely in an SMSF following death – even if the beneficiary is your surviving spouse and a member of the same SMSF. The amount must be paid out as a lump sum or continue to be paid as reversionary pension.


As part of their estate planning, many SMSF trustees prepare for the possibility that the most active member of a fund dies first. This is particularly an issue for two-person SMSFs where one member may be much more involved with their super.


Changes to superannuation laws provide a further motivation for SMSFs to gain estate-planning advice.


Specialist superannuation editor Stuart Jones writes in the Thomson Reuters Australian Superannuation Handbook 2017-18: "From July 1, 2017, estate-planning considerations have been further complicated by the introduction of a pension transfer balance cap.


"The death of a member in the pension phase," Jones adds, "is a high-risk time for a surviving spouse (or other dependant) in terms of their potentially breaching their own $1.6 million transfer balance cap."


A surviving spouse or dependant who had previously been well below the $1.6 million pension cap could "quickly find themselves" exceeding the $1.6 million cap with an excess transfer balance tax liability because of the deceased's super pension, he says.


Thorough estate planning by an SMSF and its members is a valuable legacy in itself.



 
Written by Robin Bowerman, Head of Corporate Affairs at Vanguard.
22 June 2018
www.vanguardinvestments.com.au


 




5th-July-2018
Trumpet Financial Pty Ltd ABN 11 443 516 384 Corporate Authorised Representative (No 327756) of Aon Hewitt Financial Advice Limited AFSL 239183 ABN 13 091 225 642
Registered Address: Level 33  201 Kent Street, Sydney NSW 2000 | Sitemap | Disclaimer | Privacy Policy | About Aon Hewitt Positioning