Careful Superannuation Planning

Self Managed Superannuation has become attractive to many people and families and in particular small business operators, due to the
flexibility and the opportunity to manage your own investments.

Unfortunately, in relation to Estate Planning, to the uneducated, it can be fraught with danger.

The legislation is clear; the “sole purpose” of superannuation is to “provide retirement and or death benefits to members”.
Many promoters of self managed super shout simplicity and management of your own money, which sounds attractive.

Now, when it comes to “slipping off the planet” as no doubt you will, I am sure you want the funds to go where you want – that’s part of the idea. If you run a self managed fund you should know the game rules in relation to the passing of money to whom you have nominated. If you don’t – get active, and find out because the following is a real life example of what can happen despite your best laid plans and not receiving real “specialist advice”.

So, Mummy and Daddy set up a self managed fund for their retirement. They have two grown up kids, everyone gets on and the idea is once Mum and Dad are gone, kids get the money after death, if it hasn’t all been used. Simple enough. Here’s where greed and lack of correct “specialist” checking can kick in.

Mummy dies. Daddy appoints his daughter as the new co-trustee. All goes well; fund grows well as per their original plan. Daddy continues to draw down and lives well in his retirement. Remember, both grown up kids are ultimate recipients of the fund and brother and sister get on well. Then daddy dies. The problem now, is that another “co-trustee” needs to be appointed.

The loving daughter decides to appoint her husband as the co-trustee. As Mum and Dad have both passed the rules require funds to be paid out. However a little known rule to most is that the trustees have “sole discretion” of where funds are allocated and the massive power to override what Mum and Dad wanted to happen to remaining assets of the fund. So you guessed it, the trustees allocated the whole million dollars in this case to the daughter only. Why did she do this? Because she can. So history repeats again, and greed gets in the way. There was no real thought or specialist auditing in relation to the Estate Planning in this case. Needless to say, the brother doesn’t send Christmas or birthday cards to his sister any more.

So people, this is happening out there. Did you know that? Did you also know that superannuation is not part of your will? If you want to avoid this happening to you, please make contact as we have access to a team of specialists so they we can make sure this doesn’t happen to you, and sink another family just like the Titanic.

If you have questions or would like to contact me to update your estate planning or will, you can contact me here.