Estate Planning

SMSF Association issues death benefit guide

The SMSF Association has made a go-to guide available to its members aimed at assisting them in the payment of superannuation death benefits.

“This go-to guide also provides key advice on administrative issues regarding superannuation death benefits, an interactive checklist and comprehensive case studies focused on reversionary and child pensions, the transfer balance cap (TBC) and death benefits, highlighting the need to review all succession plans involving superannuation benefits,” the SMSF Association said in a communique to its members.

Specifically, the reference aid covers off subjects such as the effect of the newly imposed TBC on the distribution of death benefits, the regulatory requirements under the general superannuation laws, the tax implication of these types of payments and the significance of the governing rules of each fund as determined by the trust deed.

In regard to the TBC, the association is particularly focused on helping its members understand how much of a death benefit can be retained in the fund in retirement phase.

“Where the recipient of a death benefit pension exceeds their TBC, they will be required to receive a lump sum death benefit,” the go-to guide states.

“This in turn limits the amount of money that can now be retained within the superannuation environment upon the death of a member.

“This represents a significant shift in relation to superannuation death benefits and estate planning, making it paramount to review all succession plans involving superannuation benefits.”

The material also covers how the TBC affects child beneficiaries of a death benefit.

Further, it highlights the even greater need for SMSF trustees to seek professional and specialist advice in regard to the tax treatment of death benefits, acknowledging this area has had a greater level of complexity introduced to it.

It recommends individuals use the go-to guide in conjunction with Law Companion Guide LCG 2017/3 “Superannuation reform: Superannuation death benefits and the transfer balance cap”.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital