Non-Estate Assets Including Superannuation

Friday January 13, 2012

Non-Estate Assets Including Superannuation

Wealth can be held in a variety of ownership forms. Estate planning requires a careful and considered examination of ownership structures to determine exactly what will fall within your estate and what will not, and to plan as appropriate for the disposition or control of these assets.

Increasingly, more and more of an individual’s wealth will be held outside the estate. These non-estate assets will include real estate and other property held as joint tenants, assets held within a company or trust, assets held within a superannuation fund (self managed or otherwise) and certain insurance policies.

Where a client has a superannuation interest in a large Australian Prudential Regulation Authority fund, it will be important to understand how the death benefit will be paid in due course. Enquiries should be made to determine whether the fund offers the ability to make binding death benefit nominations and, if so, the fund’s requirements for doing so.

Increasingly, a significant part of family wealth is held within a self managed super fund (SMSF). However, it is often not until a member of a SMSF dies that anyone turns their mind to what needs to be done about the superannuation death benefit. Problems can arise:

  • where there is uncertainty about the regulatory and trust deed requirements;
  • where tax implications have paralysed those responsible for finalising the member’s affairs; or
  • where there is a dispute about who should receive the benefit.

Superannuation death benefits can only be paid to one or more of the member’s dependants, the deceased’s legal personal representative (LPR) (being the executor of the will or administrator of the estate of a deceased person) or to any non-dependant where a dependant or LPR cannot be identified. There is a degree of inflexibility as to who can receive superannuation death benefits directly. If a member wants to benefit a person who is not a ‘dependant’ for superannuation law purposes, this can generally be achieved only by having the benefit paid to the LPR, to be applied to the required beneficiary under the Will.

For any estate planning queries, please contact Lachlan Vallance.