Anyone with funds in superannuation, particularly self-managed superannuation funds (SMSFs), should be reviewing their estate planning now to ensure their estate plan is not adversely impacted by last year’s Budget changes, according to law firm, Cooper Grace Ward.
The firm’s tax partner, Scott Hay-Bartlem said that while much had been written about transfer balance caps and accounts, reducing pension balances, and capital gains tax relief, responding to the changes also had some fundamental estate planning consequences.
“In working through the changes and their impact with clients, it is apparent that most estate plans now need some adjustment as we deal with the new measures, particularly where there is a self-managed superannuation funds,” he said.
“For example, simply taking funds out of a reversionary pension back to accumulation phase to comply with the new transfer balance cap alters what happens when that member dies,” Hay-Bartlem said. “While the remaining pension may continue with the same reversionary beneficiary (depending on the commutation process and documents used), the reversion will not apply to the amount in the accumulation account.”
He said this might mean further documents were required (such as a binding death benefit nomination or to pass control of the SMSF appropriately).
Hay-Bartlem said anyone with funds in superannuation, particularly SMSFs, should be reviewing their estate planning now to ensure their estate plan:
- Is not adversely impacted by the new rules or the steps they take to comply with the new rules; and
- Still achieves their estate planning goals after 1 July.
