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Good to Great: How to Scale With an Outsourced CFO

Small to medium-sized businesses reach a point in their growth where access to the skills and talents of an experienced Chief Financial Officer (CFO) is required.  The question they often have? Is there enough work to warrant a full-time CFO? The answer is yes.....

Wealth, Super, Estate Planning - 3 min read

What will happen to your superannuation when you die?

If you have any assets at all, you should have an estate plan. Your plan will help your heirs to know how you want your assets distributed after your death. Some estate plans are quite complicated and involved, but they can also be very simple. They direct your wishes in regards to many different kinds of assets, both estate and non-estate. Today we’re going to look at what happens to superannuation in estate planning.

 

Estate Planning Strategies

When considering superannuation and your estate, it’s important to note that superannuation death benefits do not form part of your personal estate. Superannuation law and the SMSF’s governing rules determine distribution of super death benefits. 

The Federal Court of Australia stated that “superannuation is not an asset of the estate and a trustee is not bound to follow the directions of a will. Even if superannuation is specifically mentioned in a will, it does not make it an asset subject to the terms of the will.”

The legislation surrounding superannuation states that death benefits be paid to the member’s dependants (spouse, children, or other legal dependants) or to a “legal personal representative” (executors of your estate). Therefore, death benefits can be directly paid to dependants, to the executors, or to a combination of both.

 

Superannuation and Estate Tax

It’s true that superannuation death benefits are tax-free when they’re distributed to dependants, but a “death tax” applies when the funds are distributed to individuals who are considered “non-dependants” by the tax laws. 

Who are these “non-dependants”? Non-dependants include any of your children aged 18 or over who cannot prove that they were financially dependant on you before your death. These children can be deemed dependants under the super laws, and they can still receive a death benefit from your super fund, but their benefit will likely be taxed.

 

Estate Law

You may want to change your estate planning based on the ages of your children, the structure of your family, and even the commencement of the pension phase. Your estate plan may need to be changed based on how your personal situation matches up against current estate law at different times in your life.

That’s why it’s critical that you update your estate plan on a regular basis. If you marry or divorce, have more children, experience a death in the family, or have a major change in employment, you should carefully look at your estate planning and make any necessary change.

We at Altus can help you with these changes or review your current estate plan to see if it still meets your needs. We can also help you to understand the legal and tax ramifications of your estate plan and how you might adjust it if necessary. Contact us to learn more.

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