Laws may trigger advice need for new group

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Elderly widows or widowers are expected to seek financial advice as a result of the new super rules.

The prescribed treatment of superannuation death benefits under the recently passed superannuation legislation could activate demand for financial advice from elderly widows or widowers, according to an accounting firm partner.

HLB Mann Judd wealth management partner Michael Hutton told a briefing in Sydney yesterday the situation might come about due to the fact a remaining spouse could only receive a pension resulting from their wife or husband’s death for up to $1.6 million.

Hutton added any superannuation death benefit money above that $1.6 million limit would have to be taken as a lump sum.

“You can’t bequeath your superannuation money to stay in super unless it’s paid as a pension and you can’t pay it out as a pension if [your pension account balance] is over $1.6 million,” he noted.

“This is going to become quite problematic because the money has got to come out of super, [meaning] you’re going to have 80-year-old grieving widows or widowers, or 90 year olds, suddenly having a big chunk of income coming into their bank account that they’re going to have to deal with and work out how to invest it, work out how to distribute it.”

He said he anticipated bad stories would emerge as a result of the situation about how people had lost money they had to receive as a lump sum death benefit.

“The government’s not feeling too sorry for these people because they’ve still got $1.6 million in super, so they’ve still got a lot of money floating around, but why put that imposition on people? Why force that money out of the superannuation system?” he said.

“That is where elderly people are going to need advice, and I guess that’s good for us, but I guess it’s just the fairness of it that upsets me.

“I think that’s why it’s going to be very important to have good estate planning advice.”

Further, he pointed out the situation and knowledge of large lump sums of money being received by surviving elderly spouses could lead to an increase in incidents of elder abuse as the majority of that type of behaviour was financially based.

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