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
Australia’s $4bn Super blackhole impacting self-employed most
The proper help can be a benefit - age pension
SMSFs on ATO’s radar in cryptocurrency review
Limited recourse borrowing arrangements - LRBAs
What a financial planner does to help.
Goodbye to ad-hoc portfolios
Wanted: More voluntary super contributions
Australia by the numbers – May Update
Federal Budget 2019 - Overview
How the 2019 Federal Budget affects you
The problem with getting to 53 years of age.
Paying for health care in retirement
Personal super contributions and the 10% test
What investors can expect as key moves affecting markets await
ATO flags PAYG obligations for SMSFs with legacy pensions
Don't just plan for retirement; Plan for your life
Consumers misunderstand types of advice
Budget Time - How's Australia going?
When super isn't compulsory
Investors brace for Brexit - deal or no deal
ATO identifies SMSF contravention red flags
Extra website resources and tools is one way we offer you and your family more.
Tax and estate planning traps flagged with pension restructures
A checklist for a healthy financial year
High-risk LRBAs, TBAR on the ATO’s radar this year
All you need to know about how Australia is going.
Royal Commission report makes super fee recommendations
Four tips for boosting your super balance
New Year resolutions, New Year strategies
Articles archive
Quarter 1 January - March 2019
Quarter 4 October - December 2018
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